Govt may increase oil prices by up to Rs6.93 per litre

Ogra has recommended an upward revision of oil prices in the country

ISLAMABAD: Officials in the Ministry of Petroleum and Natural Resources have revealed that petroleum product prices in the country could be increased by up to Rs6.93 per litre for January 2017 due to a rise in global crude oil prices.

The ministry has received a summary from the Oil and Gas Regulatory Authority (Ogra) on Thursday recommending an upward revision of oil prices in the country.

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



However, the government has the capability to absorb the impact of proposed increase in oil prices by adjusting the tax rates on petroleum products. Despite a decline of over 50% in global prices, consumers have largely been denied a full relief in previous months due to hefty taxes to avoid revenue loss to the government. At present, two types of taxes are being charged from the oil consumers including petroleum levy and general sales tax.

The Ministry of Finance may oppose any proposal for keeping oil prices unchanged in the latest revision as it would affect the country’s revenues. Final decision will be taken by the cabinet chaired by Prime Minister Nawaz Sharif.

Breakdown

The global price rise would affect the prices of petrol, kerosene oil, High Speed Diesel and Light Diesel Oil.

According to Ogra’s summary, the consumers of HSD, which is mostly used in the transport and agriculture sectors, may face increase of Rs 3.94 per litre which would take the price to Rs79.16 per litre from the existing Rs72.52, while the Petrol prices may increase by Rs2.31, taking the price to Rs68.58 per litre.

The price of kerosene oil, which is mostly used for cooking purposes in remote areas where liquefied petroleum gas is not readily available, may be increased from Rs43.25 to Rs50.18per litre with an increase of Rs6.93 per litre.

Similarly, LDO, mainly used for industrial purposes, may record an increase of Rs3.48, meaning the price will go up from Rs43.34 to Rs46.82per litre.