Global crude rates: Prices of petroleum products set to rise by 38.6 per cent

Ministry receives Ogra summary recommending the upward revision in oil prices

ISLAMABAD: The prices of petroleum products are likely to go up 38.6 per cent for February this year on the back of a rise in global crude oil prices.

Major increases have been proposed in prices of Light Diesel Oil (LDO) and kerosene oil.

Officials maintained that currently, the government was charging zero sales tax on the two products and even petroleum levy was at its lowest rate.

The proposed increase in prices of these two products is based on 17 per cent General Sales Tax (GST). The government is also charging 5 paisa per litre petroleum levy on kerosene oil against Rs6 per litre notified in the budget.



The ministry received a summary from the Oil and Gas Regulatory Authority (Ogra) on Monday that recommended the upward revision in oil prices.

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

The government can absorb the impact of the proposed increase in oil prices by adjusting tax rates on petroleum products.

Currently, consumers are paying two types of taxes — petroleum levy and GST. But the finance ministry may oppose any proposal for keeping oil prices unchanged, because it would affect national revenue generation.

However, the final decision will be taken by Prime Minister Nawaz Sharif.

Breakdown

Following the global price rise, the effect will be felt in prices of petrol, kerosene, High Speed Diesel and LDO. However, prices of JP-1 may decline by 0.2 per cent.

According to Ogra’s summary, the price of HSD may increase by as much as Rs4.29 per litre (5.6 per cent), increasing its price to Rs81.51 per litre from the existing rate of Rs77.2 per litre.



However, petrol prices may go up from the existing Rs68.04 to Rs72.2 per litre, an increase of Rs4.16 per litre (6.1 per cent).

The price of kerosene oil may rise from Rs43.25 to Rs59.96 per litre after an increase of Rs16.71 per litre (38.6 per cent).

Similarly, the price of LDO may increase by Rs12.53 (28.9%) from Rs43.34 to Rs55.87 per litre. The price of JP-1 may decrease by Rs0.09 (0.2 percent), from Rs51.62 to Rs51.53 per litre.

Published in The Express Tribune, January 31^st, 2017.