ISLAMABAD: Officials at the petroleum and natural resources ministry have indicated that petroleum product prices in the country could be increased by up to 7.5% for December 2016 due to a rise in global crude prices.
The ministry received a summary from the Oil and Gas Regulatory Authority (Ogra) on Tuesday that recommended an upward revision in oil prices. Prices of all petroleum products, except for kerosene, are deregulated and Ogra only monitors their prices.
Ogra recommends up to 7.5% hike in petroleum prices
The government has the capability to absorb the impact of the proposed increase in oil prices by adjusting tax rates on petroleum products. Despite a decline of over 50% in global prices, consumers have largely been denied full relief in previous months due to hefty taxes to avoid revenue losses to the government.
At present, two types of taxes are being charged from consumers — petroleum levy and general sales tax. But the finance ministry may oppose any proposal for keeping oil prices unchanged during the latest revision, because it would affect the country’s revenues.
However, any final decision will be taken by the cabinet chaired by Prime Minister Nawaz Sharif.
Following the global price rise, the effect will be felt in the prices of petrol, kerosene, High Octane Blending Component (HOBC) and High-Speed Diesel (HSD). However, the prices of light diesel and JP-1 may witness a decline by 0.3% and 4.4%, respectively.
According to Ogra’s summary, petroleum ministry officials said consumers of HSD, which is mostly used in the transport and agriculture sectors, may face an increase of Rs5.42 (7.5%) which would take its price to Rs77.94 per litre from the existing Rs72.52.
SSGC wants OGRA to allow increase in gas price
However, petrol prices may go up from the existing Rs64.27 to Rs68.28 per litre, an increase of Rs4.01 (6.2%).
The price of kerosene may be increased from Rs43.25 to Rs46.06 per litre with an increase of Rs2.81 (6.5%).
Similarly, LDO, mainly used for industrial purposes, may record a reduction of Rs0.13 (0.3%), meaning the price will go up from Rs43.34 to Rs43.21 per litre. Prices of JP-1 may be decreased by Rs2.06 (4.4%) from Rs46.67 to Rs 44.61 per litre.
Published in The Express Tribune, November 30th, 2016.
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