ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has recommended a reduction in prices of petroleum products by up to 13.5 per cent in the month of January 2019.
The regulatory authority has suggested that prices of petrol may be reduced by Rs9.50 per litre (10%), and the high speed diesel (HSD) by Rs15 per litre (13.5%). It has also recommended Rs.0.25 and Rs2 reduction respectively in prices of kerosene oil and the light diesel oil (LDO).
Ogra has forwarded the summary to Ministry of Energy, Petroleum Division that has recommended the downward revision in oil prices.
If the government accepts this recommendation, then petrol price would go down from the existing Rs95.83 per litre to 86.33 a litre and that of the LDO from Rs77.44 per litre to Rs75.44 per litre.
Petrol, diesel prices reduced by Rs2 each
The HSD price will come down to Rs95.94 per litre from the existing Rs110.94 a litre and kerosene’s price will reduce to Rs83.25 per litre from the existing price of Rs83.50 per litre.
The government will take the final decision on Ogra’s recommendation on Monday. The regulator recommended a decrease in petroleum prices by calculating them at 17 per cent general sales tax (GST).
For current month, the Federal Board of Revenue (FBR) increased sales tax on diesel from 12 per cent to 13 per cent while for petrol it was increased from 4.5 per cent to 8 per cent. However, the sales tax on petrol is still low as compared to the standard rate of sales tax which is 17 per cent.
Ogra recommended a decrease in prices of petroleum products after the rates of crude oil dropped in the international market below $50 a barrel in November. The average for the month was $65/b.
Experts believed higher US supplies would flood the market. At the same time slowing down global growth would cut into the demand. Saudi Arabia and Russia have also produced oil at record rate.
On December 7, 2018, the Orgnaisation of the Petroleum Exporting Countries (OPEC) agreed to cut 1.2 million barrels per day from the October levels.
Members would cut 800,000 barrels per day and allies would cut 400,000 bpd. Cuts would continue for six months. OPEC's goal is to take back prices to $70 a barrel by early fall 2019. The price drop occurred just two months after global oil prices hit a four-year high of $81.20/b on September 24, 2018.