In PM’s absence, decision to cut petroleum prices in limbo

OGRA has proposed up to 6.3% decrease; recommends reduction of Rs5.07 in diesel rate and Rs3.67 in petrol price

ISLAMABAD: Oil consumers could get reasonable relief at the start of next month as the industry regulator has proposed a reduction of up to 6.3% in prices of petroleum products, taking cue from the global market trend.

The price cut has been recommended for major petroleum products - petrol and diesel - that are mostly consumed in Pakistan. However, the regulator has proposed an increase of up to 29.5% in prices of kerosene oil and light diesel oil.

The recommendation comes at a time when the prime minister has resigned following disqualification by the Supreme Court for failing to prove the money trail that led to the purchase of four luxurious apartments in London. Final approval for the oil price revision is given by the prime minister.



However, the government is likely to keep petroleum product prices unchanged as the prime minister has stepped down. In the absence of the premier, there seems to be no competent authority to decide on the price revision.

In a summary prepared and sent by the Oil and Gas Regulatory Authority (Ogra) to the ministries of petroleum and finance on Friday, it has been proposed that petrol and diesel should be somewhat cheaper from the beginning of August.

“The finance ministry will support only a partial price reduction in an effort to make up for the revision in taxes made by the government over time,” an official commented.

According to the Ogra summary, high-speed diesel, which is mostly consumed in transport vehicles and the agriculture sector, should be cheaper by Rs5.07, or 6.3%, per litre. This will take its price down to Rs74.83 per litre from the existing Rs79.90.

Apart from farmers and transporters, the price cut could have a favourable impact on the rate of inflation in the country. “If the government is able to force the transporters to cut down their fares, it will bring down the inflation rate,” the official said.

Petrol price is likely to come down by Rs3.67, or 5.1%, to Rs67.63 per litre compared to the current price of Rs71.30 per litre.

At present, compressed natural gas (CNG) is not available in several parts of Punjab and imported gas is being used by the consumers. A reduction in the petrol price will provide some relief to the motorists.



Ogra has recommended an increase of Rs13, or 29.5%, in the price of kerosene oil, which is used for cooking purposes in remote areas where liquefied petroleum gas (LPG) is not easily available. Its price will go up to Rs57 per litre against the existing Rs44.

The price of light diesel oil, consumed mainly by industrial units, may be increased by Rs10.01, or 22.8%, per litre, and it will reach Rs54.01 per litre compared to the current Rs44 per litre.

The official pointed out that general sales tax and petroleum levy were not collected on the sale of kerosene oil and light diesel oil. However, Ogra’s calculation was based on the budgeted general sales tax and petroleum levy, which resulted in the proposed increase in prices of these two products.

However, the government is likely to keep petroleum product prices unchanged as the prime minister has stepped down. In the absence of the premier, there seems to be no competent authority to decide on the price revision.

Published in The Express Tribune, July 29^th, 2017.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.