New rates: Petrol, HSD prices cut by just Rs1.5 a litre

People denied full benefit of world oil price drop

ISLAMABAD: The government on Friday passed on just half the benefit of the cut in world oil prices to domestic consumers by reducing prices of both petrol and high-speed diesel (HSD) by just Rs1.5 per litre.

It again decided to keep the rate of General Sales Tax on petrol and HSD higher than the standard rate of 17 per cent, denying the full benefits of low oil prices to the domestic consumers. The sales tax rate on petrol was further increased to 20.5% of the product’s total price. The GST rate on diesel (HSD) was partially reduced to 33.5%, still almost double the standard rate of 17%.

Also on Friday, the Federal Board of Revenue (FBR) notified the new rates with effect from July 1, remaining valid for a month.



Announcing the new petroleum prices, Finance Minister Ishaq Dar said the new diesel prices will be Rs79.9 per litre while petrol will be sold for Rs71.3 per litre.

The finance minister said the government decided to maintain prices of kerosene and light diesel oil at current levels until July 31. The price of kerosene and light diesel oil will remain at Rs44 a litre.

Dar said the Ministry of Petroleum and Natural Resources and the Oil and Gas Regulatory Authority (OGRA) had recommended an increase of Rs10.95 a litre in the price of kerosene oil. They also recommended an increase of Rs6.82 per litre in the price of light diesel oil. The government, however, imposed a nominal 1.5% GST on light diesel oil.

OGRA, he said, had also recommended a decrease of Rs3.33 per litre in the price of petrol, but the government reduced it by 47% or Rs1.5 per litre. Similarly, contrary to OGRA’s recommendation to cut the HSD price by Rs2.73 per litre, the Finance Ministry decided to reduce the price by 55% of the recommended price to Rs79.9 per litre.

The crude oil prices have been hovering between $45 and $53 per barrel.

The government had absorbed a significant impact of price increases since April last year, suffering a considerable loss of revenue, the finance minister maintained. However, the losses claim does not hold water as the government kept charging far more than the standard rate (17%) of GST on these two products.



Haroon Akhtar Khan, Special Assistant to Prime Minister on Revenue, also claimed last week that FBR sustained Rs120 billion losses because of reduced prices of petroleum products during the fiscal year 2016-17.

Only partial increases (in oil prices) were passed on to consumers since December last year, Dar maintained.

He stated that, in line with the prime minister’s instructions to provide maximum relief to the common man, and keeping in view that Kerosene Oil and LDO is used by low-income segments of the country’s population, it has been decided to maintain the prices of Kerosene Oil and LDO at the current level till July 31.