Passing on costs: Govt hikes petrol prices by Rs1.50 for April

Ogra’s proposal of a higher increase in prices rejected


Zafar Bhutta April 01, 2016
Ogra’s proposal of a higher increase in prices rejected. PHOTO: RIAZ AHMED/EXPRESS

ISLAMABAD:


The government approved Rs1.50 increase in fuel prices  on Thursday as it passed on a partial increase in international fuel prices on to the consumers following recent fluctuations.


The new prices will come into effect from midnight today (Friday), April 1, 2016.

In a summary moved to petroleum and finance ministries, the Oil and Gas Regulatory Authority (Ogra) had proposed an increase of up to Rs5.64 in petroleum prices. But Prime Minister Nawaz Sharif decided to only partially raise prices of petrol while approving Ogra’s proposal on raising prices of high speed diesel. Prices of other petroleum products were kept unchanged.

Ogra had proposed that petrol prices should be increased by Rs3.09 per litre. But Nawaz only approved an increase of Rs1.50, raising prices from Rs62.77 to Rs64.27 per litre.

Likewise, Ogra had proposed raising the price of high speed diesel by Rs1.40 per litre -- which is mostly used in the transport and agriculture sectors. The government approved the proposal, raising prices from Rs71.12 to Rs72.52 per litre.

Ogra had also proposed to raise prices of Kerosene Oil -- used for cooking purposes in remote areas where liquefied petroleum gas is not readily available -- by Rs5.64. But the government decided to keep its prices unchanged at Rs43.25 per litre.

Prices of Light Diesel Oil -- mainly used for industrial purposes – were proposed to be raised by Rs4.91. Nawaz, however, turned down the proposal and kept the price unchanged at Rs37.97 per litre.

Ogra had proposed to raise prices of High Octane Blending Component (HOBC) -- mainly used in luxury cars –by Rs4.67, per litre. The proposal was also shot down and its price was kept unchanged at Rs72.68 per litre for the month of April.

Prices of all products, except kerosene oil, are deregulated and Ogra only monitors the prices.

The government has also increased prices of jet fuel by 14.8 per cent. The price of JP-1 has been increased by Rs3.68 per litre (11.3 per cent) to Rs36.35, JP-4 Rs4.15 (14.1 per cent) to Rs33.61 and JP-4 Rs4.65 per litre (14.8 per cent) Rs36.01 per litre.

Govt opted to pass on burden

Officials believe that the government had space to absorb the impact of rising oil prices by cutting the rate of tax. But the finance ministry opposed any cut in taxes to avoid revenue loss leaving the government little choice but to pass on increase in prices of petrol and diesel on to the consumers.

Currently the federal government charges Rs29.57 per litre as GST on high speed diesel and Rs14.48 per litre on petrol. Additionally it charges a petroleum levy (PL) which stands at Rs10 and Rs8 per litre respectively.

The government collects around Rs30 billion in GST and around Rs10 billion on account of PL on petroleum products. Previously the government had been collecting Rs20 billion GST per month.


Published in The Express Tribune, April 1st, 2016.

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