OGRA notifies price reversal
Government formally halves the almost 10 per cent increase in petroleum products prices.
ISLAMABAD:
The government beat yet another hasty retreat under intense political pressure on Friday after it formally halved the almost 10 per cent increase in petroleum products prices.
The Oil and Gas Regulatory Authority (Ogra) issued the notification late Friday night. According to Ogra and the petroleum ministry officials, the notification will be effective from March 5.
The decision, experts say, is likely to result in a massive shortfall in petroleum levy collection.
An official of the finance ministry said that the government move would cause an additional loss of Rs3.5 billon to the national exchequer, taking the total March impact to Rs8.5 billion.
The government has already absorbed Rs13 billion in oil subsidies between December and February.
The authorities estimated that the government collected Rs110 billion till June last year. Finance ministry documents showed that during the first six months of the current financial year, it pooled only Rs 35 billion.
According to an Ogra official, the government has reduced the petrol prices to Rs76.58 per litre against the March 1 price of Rs80.19 per litre, a reduction of Rs3.61 per litre. The reduction was only possible after reducing petroleum levy to Rs 3.16 a litre from the March 1st level of Rs6.25. Under the Finance Bill 2010, the government had levied Rs10 per litre levy on petrol.
The high-speed diesel prices were also slashed to Rs82.22 per litre- a reduction of Rs3.81 per litre. Again the government reduced levy to almost nil,.44 paisa per litre from Rs3.75.
On February 28, the government increased petroleum products’ prices by up to 10 per cent, contending that prices in the international market had gone up by 25 per cent over the past three months. It had argued that despite 10 per cent increase it was absorbing Rs5 billion in subsidy.
The Express Tribune contacted the IMF country mission for its comments on the latest decision. In a very terse reply, the Fund Mission replied: “We have no comments at this time.”
The government also reduced kerosene oil prices by Rs3.5 per litre. It notified the new price of Rs74.45 per litre. Its previous notified price was Rs77.95 per litre. Instead of earning any revenue, the government would now give a subsidy of Rs 2.74 per litre on kerosene oil.
The price of light diesel oil was also cut by Rs3.3 per litre. It will now be sold at Rs69.91 against the March 1 rate of Rs73.21 per litre. On this fuel too, the government will give a subsidy of Rs2.82 per litre.
On High Octane Blending Component the government provided Rs 4.29 per litre relief. The new HOBC prices will be Rs90.96 per litre against the earlier rates of Rs95.25 per litre. In the case the government has increased Rs 5.58 per litre prices over October level and would earn Rs 6.13 per litre subsidy.
Published in The Express Tribune, March 5th, 2011.
The government beat yet another hasty retreat under intense political pressure on Friday after it formally halved the almost 10 per cent increase in petroleum products prices.
The Oil and Gas Regulatory Authority (Ogra) issued the notification late Friday night. According to Ogra and the petroleum ministry officials, the notification will be effective from March 5.
The decision, experts say, is likely to result in a massive shortfall in petroleum levy collection.
An official of the finance ministry said that the government move would cause an additional loss of Rs3.5 billon to the national exchequer, taking the total March impact to Rs8.5 billion.
The government has already absorbed Rs13 billion in oil subsidies between December and February.
The authorities estimated that the government collected Rs110 billion till June last year. Finance ministry documents showed that during the first six months of the current financial year, it pooled only Rs 35 billion.
According to an Ogra official, the government has reduced the petrol prices to Rs76.58 per litre against the March 1 price of Rs80.19 per litre, a reduction of Rs3.61 per litre. The reduction was only possible after reducing petroleum levy to Rs 3.16 a litre from the March 1st level of Rs6.25. Under the Finance Bill 2010, the government had levied Rs10 per litre levy on petrol.
The high-speed diesel prices were also slashed to Rs82.22 per litre- a reduction of Rs3.81 per litre. Again the government reduced levy to almost nil,.44 paisa per litre from Rs3.75.
On February 28, the government increased petroleum products’ prices by up to 10 per cent, contending that prices in the international market had gone up by 25 per cent over the past three months. It had argued that despite 10 per cent increase it was absorbing Rs5 billion in subsidy.
The Express Tribune contacted the IMF country mission for its comments on the latest decision. In a very terse reply, the Fund Mission replied: “We have no comments at this time.”
The government also reduced kerosene oil prices by Rs3.5 per litre. It notified the new price of Rs74.45 per litre. Its previous notified price was Rs77.95 per litre. Instead of earning any revenue, the government would now give a subsidy of Rs 2.74 per litre on kerosene oil.
The price of light diesel oil was also cut by Rs3.3 per litre. It will now be sold at Rs69.91 against the March 1 rate of Rs73.21 per litre. On this fuel too, the government will give a subsidy of Rs2.82 per litre.
On High Octane Blending Component the government provided Rs 4.29 per litre relief. The new HOBC prices will be Rs90.96 per litre against the earlier rates of Rs95.25 per litre. In the case the government has increased Rs 5.58 per litre prices over October level and would earn Rs 6.13 per litre subsidy.
Published in The Express Tribune, March 5th, 2011.