Oil prices unchanged as PM Imran rejects price hike

The federal government on Monday announced keeping oil prices unchanged for a fortnight effective September 1, 2020 (today) after Prime Minister Imran Khan turned down recommendations of the Oil and Gas Regulatory Authority (Ogra), petroleum and finance divisions to increase the prices of petroleum products, citing high food inflation faced by the people.

The government switched from monthly to a fortnightly basis, following demand of the oil industry to rescue them from inventory losses.

The government has decided to maintain the petroleum prices of August for the month of September 2020.

According to a statement issued by the PM Office, Premier Imran did not approve the recommendation of Ogra, petroleum and finance divisions for an increase in prices of petroleum products.

“People are already facing high food inflation and need some reprieve, especially because of heavy rains,” PM Imran said, underlining that the government would have to forego Rs17 billion in taxes which would be given as subsidy to the people to moderate their burden.

Ogra had recommended an increase of Rs9.71 per litre in the price of petrol and Rs9.50 per litre in that of high speed diesel (HSD).

The regulator forwarded its proposal of increasing the prices of petroleum products to the federal government. The prices of petrol and HSD were computed on the basis of present rate of petroleum levy at Rs30 per litre, which is higher than the current Rs26 per litre.

This is the first time that Ogra is determining the price of petroleum products on a fortnightly basis and shifting the Pakistan State Oil’s (PSO) price benchmark to Platts indexes with effect from September 1.

Under the new guidelines of the federal government, the oil marketing companies (OMCs) and refineries are determining the ex-refinery prices of petrol and HSD on Arab Gulf Platts’ daily Free on Board (FOB) average for the number of days in the pricing period as the base commodity price.

Premium above platts, freight and incidentals would be taken as average of the Pakistan State Oil’s (PSO) procurement for the pricing period and added to the base commodity average price in a (above) as per existing practice. Taxation and levies will be applicable rates.

Exchange rate has been used as provisionally available for the PSO but to be converted to actual upon retirement of LC (not later than 60 days from B/L date), any adjustment to be made as prior period adjustment as per present practice, already approved by the Economic Coordination Committee of the Cabinet vide its decision taken on April 9, 2020. Other cost components may also be adjusted on actual basis in the next fortnight/month.

The PSO would arrange long-term agreement of petrol to avail discounted premium as prevailed in case of HSD and Kuwait Petroleum.

In case of non-availability of PSO's premium/freight or incidentals of previous fortnight, the PSO's previous month available incidentals of a fortnight will be applied.

LPG price hike

Ogra on Monday issued an upward price revision notification of liquefied petroleum gas (LPG) for the month of September.

According to the notification, the authority has increased the locally produced LPG price by Rs18.83 per 11.8 kilogramme cylinder.

After the price revision, the cylinder will be sold in open market at Rs1,382.38, which was available at Rs1,363.55 during the month of August.

Whereas, per metric ton (MT) LPG rate has been fixed at Rs117,151.14 for the month of September. The commodity sale price per MT was Rs115,555.55 during the month of August.

The new price will be effective from September 1 (Tuesday).