Price cut likely for petrol and diesel

OGRA, however, recommends increase in kerosene oil price

ISLAMABAD: Consumers of petrol and diesel are likely to get some relief this time around as the government is expected to slash petroleum product prices for June, taking a cue from price movements in the global market.

The price reduction is likely following rate increases over the past many months.



However, the government is expected to push up prices of light diesel oil and kerosene oil, which is widely consumed by the poor, but reports of its mixing with diesel are doing rounds in the market.

The Oil and Gas Regulatory Authority (Ogra) has prepared its recommendations for monthly revision in petroleum product prices and sent them to the Ministry of Petroleum and Natural Resources.

According to its calculations, prices of petrol and high-speed diesel should be reduced by Rs2.3 and Rs3.2 per litre respectively. However, prices of light diesel oil and kerosene oil should be jacked up by Rs9.5 and Rs13.60 per litre respectively.

Price revision will be made after getting approval of Prime Minister Nawaz Sharif. New petroleum prices will come into effect from June 1, 2017.

Consumers of petroleum products have been facing partial increase in prices for the past many months in the wake of fluctuations in global crude prices.

Brent crude prices - an international benchmark - stood at $51.30 a barrel in afternoon trade on Tuesday. In a bid to prop up prices, the Organisation of Petroleum Exporting Countries (OPEC) and some non-OPEC producers agreed last week to extend production cuts of around 1.8 barrels per day until March 2018.

According to the Ogra summary, the petrol price should be cut by Rs2.3 per litre and, if approved, it will bring down the price from the current Rs74 to Rs71.70 per litre.

Similarly, a reduction of Rs3.2 per litre has been recommended for high-speed diesel, which will take its price to Rs79.80 per litre from the current Rs83. The price of kerosene oil is proposed to be increased by Rs13.60 to Rs57.60 per litre compared to the existing Rs44 and the price of light diesel oil is likely to go up by Rs9.5 to Rs53.50 per litre from the current Rs44.

Explaining the proposed increase in kerosene oil and light diesel oil prices, officials said sales tax were not being collected on the sale of the two petroleum products, but Ogra calculated their prices by including the impact of sales tax.

The government would take the final decision whether to continue the tax relief or impose the levy to enhance its revenue receipts, they said.



High-speed diesel is mainly used in sowing agricultural crops and transport vehicles and a reduction in its price will have a positive impact on these sectors and bring down the overall inflation.

Kerosene oil is used in those remote areas where liquefied petroleum gas (LPG) is not available for cooking purposes and any increase in its price will affect the life of common man living in these regions.

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

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