Oil prices expected to be slashed by up to 12% in March

OGRA moves summary proposing lower rates; final decision, however, to be taken by the Prime Minister

ISLAMABAD:

Pakistani consumers can hope to reap some dividends from falling international oil prices in the wake of the US lifting sanctions against Iran, as the government is expected to slash domestic retail prices of petroleum products by up to 12% in March.

According to a proposal forwarded to the finance ministry by the Oil and Gas Regulatory Authority (Ogra), the price of petrol could be cut by Rs8.48 per litre, bringing it down from the current level of Rs71.25 to Rs62.77 per litre.





High-speed diesel would see its prices cut by Rs4.67 per litre from Rs75.79 per litre to just Rs71.12 per litre. Light diesel oil would see its prices drop by Rs1.97 per litre from Rs39.94 to Rs37.97per litre. The prices of High-Octane Blended Component would decline by Rs2.98 to Rs72.68 from Rs75.66per litre. Kerosene oil would see its price increased by Rs1.66 per litre from Rs43.25 per litre to Rs44.91 per litre.

While the prime minister is the final arbiter on changing fuel prices, Finance Minister Ishaq Dar has been resisting attempts in recent months to slash fuel prices even as international prices hit rock bottom at $26. Instead, he has balanced the cut in fuel prices with hikes in temporary taxes as a means to boost government revenue and to manage the fiscal deficit. Over 25% of all government revenues come from the energy sector.

Last month, Ogra recommended a 17% cut (between Rs7 and Rs11) in oil prices for February due to sharp decline in global oil prices, but the government slashed the rate by just Rs5, absorbing the remaining impact in General Sales Tax (GST).



The government decided last month to fix the rate of GST like the petroleum levy to prevent revenue loss following the decline in domestic oil prices.

Since prices began to fall in the international market, the government claims that it has passed it on to consumers, slashing fuel prices by as much as Rs40.

Published in The Express Tribune, February 27^th,  2016.