ISLAMABAD: In view of the fluctuation in global oil prices, the government on Saturday announced an increase of up to Rs4 per litre in prices of all petroleum products. The new prices will be effective for a period of one month starting from October 1 (today), according to a statement issued by the Ministry of Finance.
The Oil and Gas Regulatory Authority (Ogra) had recommended an increase of Rs2.35 per litre in the price of petrol [MS 92 RON], Rs2.17 in the price of high speed diesel (HSD), Rs19.32 litre in the price of kerosene oil and Rs14.09 in the price of light diesel oil (LDO).
However, after deliberation the prime minister approved an increase of Rs2 each in the prices of petrol, the HSD and the LDO, while the price of kerosene oil is increased by Rs4 per litre. The price of petrol now stands at Rs73.50 per litre; of the HSD Rs79.40 per litre, the LDO Rs46 per litre and kerosene oil Rs48 per litre.
In the past couple of years – following a plunge in global crude prices – the government has burdened petroleum consumers with heavy taxes, especially on petrol and the HSD, which are widely used in small and heavy vehicles as well as in agriculture sector.
Among petroleum products, the HSD is the most consumed fuel. At present, government is charging zero general sales tax and petroleum levy on kerosene oil and the LDO.
Oil mafia is selling kerosene oil on higher rates ranging from Rs90 to Rs100 per litre against existing price of Rs44 due to black marketing. It is interesting to note that the government had not increased rate of the fuel for several months – a move that had bailed out black marketers.
However, the government has now increased prices of kerosene oil and the LDO for the month of October. This raise will help adjust general sales tax and petroleum levy.
The government has had the room to absorb impact of oil price increase as it is still collecting heavy taxes on the sale of petroleum products. It receives more than Rs25 billion in general sales tax on petroleum products and Rs10 billion in the shape of petroleum levy from consumers every month.
Consumers in Pakistan have been paying up to 38% more on oil purchase compared with prices prevailing in the international market in order to make up for the shortfall in government revenues.