KARACHI: Consumers of petrol and diesel are likely to get some relief as the government is expected to slash petroleum product prices for July 2017, taking cue from price movements in the global market.
The Oil and Gas Regulatory Authority (Ogra) prepared and sent a summary for monthly revision in petroleum product prices to the Ministry of Petroleum and Natural Resources on Thursday, proposing changes that would take effect from the beginning of next month.
According to the summary, Ogra proposed a reduction of Rs2.70 in the price of high-speed diesel (HSD), which is mostly used in transport and agriculture sectors, and it will take the price from Rs81.40 to Rs78.70 per litre.
A reduction in the HSD price will have a positive impact on these sectors and bring down the overall inflation.
Petrol (motor spirit) price may go down from the current Rs72.80 to Rs69.50 per litre, a decrease of Rs3.30. The price of kerosene oil – used for cooking in remote areas where liquefied petroleum gas is not readily available – may be increased from Rs44 to Rs55 per litre – a spike of Rs11. Any increase in the price of kerosene will affect the life of common man living in these regions.
Similarly, the price of light diesel oil (LDO) – used mainly for industrial purposes – may go up by Rs7 to Rs51 per litre compared to the current price of Rs44.
Prices of all petroleum products, except kerosene oil, are deregulated and Ogra only monitors their prices. However, the final decision on price revision will be taken by Prime Minister Nawaz Sharif.
The government has the capability to absorb the impact of proposed increase in oil prices by adjusting tax rates for petroleum products.
Despite a decline of over 50% in global crude prices over the past few years, the consumers have largely been denied a full relief due to hefty taxes. Pakistan continues to suffer from revenue shortfall and a tax-to-gross domestic product (GDP) ratio that is one of the lowest in the region.
At present, two types of taxes are being charged from oil consumers including petroleum levy and general sales tax.
The Ministry of Finance may oppose any proposal for keeping oil prices unchanged in the latest revision as it would affect the country’s revenues.
In the London market, the price of Brent crude futures stood at $47.6 per barrel in early afternoon trading on Thursday.
Published in The Express Tribune, June 30th, 2017.