Petrol, diesel prices go up by Rs1 per litre

Ishaq Dar claims govt will bear a burden of Rs3b for keeping prices of LDO, kerosene oil unchanged

Zafar Bhutta February 15, 2017

ISLAMABAD: The government has announced to increase prices of petrol and high speed diesel (HSD) by Rs1 from Thursday. However, the prices of kerosene oil and light diesel oil (LDO) will remain unchanged.

“The government has decided to increase the price of MS-92 RON petrol and the HSD by Rs1 per litre. This is almost half of the increase recommended by Ogra [Oil and Gas Regulatory Authority],” said Finance Minister Ishaq Dar on Wednesday while talking to reporters.

After the increase, the price of diesel is now pegged at Rs80.48 per litre while the price of petrol is now Rs71.29 per litre. The prices of kerosene oil and the LDO will remain Rs43.25 and Rs43.34 per litre, respectively.

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According to a statement, the Ministry of Petroleum and Ogra had recommended an increase of Rs1.91 per litre in the price of MS 92 RON petrol, Rs2.03 per litre in the price of HSD, Rs16.71 per litre in the price of kerosene oil and Rs12.53 per litre in the price of the LDO.

“[However,] in line with the PM’s instructions to provide maximum relief to the common man, and keeping in view that kerosene oil and LDO are used by the low-income segments…, it has been decided to maintain their prices …at the current level till end of February,” the finance ministry said.

“This decision has been taken in view of the fact that kerosene oil caters to the energy needs of the poor, especially in the winter season,” the statement added.

The government claims that in order to maintain stability, prices have been maintained since April 2016 despite an increase of around 43% in international oil prices during 2016.

“The government has been absorbing the negative financial impact due to its decision to not pass on price hike to the end consumers.  The government will bear a burden of Rs3b due to partial increase in prices of the HSD and keeping prices of LDO and kerosene oil unchanged,” the statement said.

However, apparently the decision not to change prices of kerosene oil and LDO will not provide relief to the common man, as claimed by the government. The LDO is used in the industry while the kerosene oil is being largely mixed by oil refineries and petroleum dealers in diesel for adulteration.

The refineries charge ‘deemed duty’ on diesel but there is no such duty on kerosene oil. By mixing kerosene oil in diesel, the refineries make additional money in an indirect way.

The petroleum dealers are also engaged in a similar practice. The Pakistan State Oil officials had admitted before a parliamentary body on petroleum that the practice to mix kerosene oil in diesel was on the rise. They had suggested increasing price of kerosene oil to discourage adulteration.

At present, the government is charging 31 per cent general sales tax (GST) on the HSD, 17 per cent on petrol, 17 per cent on kerosene oil and 17 per cent on the LDO. The government is collecting around Rs30b per month on account of GST and Rs12 billion per month as petroleum levy from oil consumers.

The government has switched from monthly to fortnightly oil price review mechanism since January.


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