Petrol dearer by Rs2 and HSD by Rs2.70 per litre. PHOTO: AFP
The government also announced to freeze prices of petrol and High Speed Diesel (HSD) effective from January 1 this year.
However, the prices of Light Diesel Oil (LDO) and kerosene oil would remain unchanged for the entire month of January.
For first time, the government introduced the fortnightly price mechanism because of the price fluctuations. The government is likely to raise prices of these products from January 16 if the current price trend persists, an official said.
“It has also been decided that the prices of MS RON 92 Petrol and HSD will remain unchanged at current level till midnight of January 15 this year,” the finance ministry said in a statement.
An official said that oil companies had been pressing the government to revise oil prices on fortnightly basis if global oil prices increased to avoid losses. When oil prices go down, they insisted upon the government to revise oil prices on monthly basis, official said, adding that the government announced to revise oil prices on monthly basis to protect oil marketing companies from losses and government from revenue loss.
Following the decision, the government would have to bear a revenue loss of Rs4 billion after it absorbed the impact. An official of the petroleum ministry said that average crude oil prices had risen to $53.5 per barrel from $48 per barrel.
Finance Minister Senator Ishaq Dar announced the government’s policy regarding petroleum products prices for January this year.
He said that the Ministry of Petroleum & Natural Resources and OGRA had recommended to increase prices by 0.5 per cent in MS 92 RON Petrol, 5.2 per cent in HSD, 16 per cent in Kerosene Oil and 8 per cent in LDO with effect from January 1 this year which worked out to be Rs0.31 per litre in MS 92 RON Petrol, Rs3.94/litre in HSD, Rs3.48/litre in LDO and Rs6.93/litre in Kerosene Oil.
The proposed increase in prices of Kerosene, LDO and MS Petrol are based on reduced Sales Tax. If the full sales tax is levied at 17 per cent on these products, the increase in these products would have worked out to be Rs14.31 per litre in Kerosene Oil, Rs10.11 per Litre in LDO, and Rs1.77 in MS Petrol.
In order to maintain stability since April 2016, prices have been maintained despite fluctuation in international prices and the government has been absorbing the negative financial impact after the government decided not to pass on the increase to end consumers. Only partial increase in MS Petrol and HSD of what had been recommended by OGRA was passed on to end consumers for December last year.
In line with the Prime Minister’s instructions to provide maximum relief to the common man, it has been decided to maintain the prices of Kerosene and LDO at current levels for the entire month of January this year.
Published in The Express Tribune, January 1st, 2017.
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