OGRA recommends Rs16 per litre hike in POL prices

The Oil and Gas Regulatory Authority (Ogra) has recommended the government to increase the price of petrol by up to Rs16 per litre from February 16.

The hike in price of petrol has been suggested in view of the global rise in the prices of petroleum products.

However, the method used by the regulator to determine the petroleum products prices is on a higher side of the tax bracket through which it has been sending inflated figures of the proposed oil prices to the government.

This is providing an opportunity to the government to pass on actual increase in the POL prices to consumers.

While adjusting the fuel price a fortnight ago, the government had claimed that despite the regulator proposing a big increase, the consumers were burdened with a nominal raise in the fuel prices.

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Ogra has been calculating the prices of petroleum products on the budgeted rate of petroleum levy rather than its actual rates.

Industry officials told The Express Tribune that the increase would not be over Rs3 per litre effective from February 16, 2021, if the government does not make changes to the rate of petroleum levy.

According to the working of the industry, the prices if determinied on the basis of ‘actual increase’ and after taking into account fluctuation in the global oil prices comes to Rs2.72 per litre on petrol and Rs3 per litre on high speed diesel.

However, Ogra had worked out the increase in the prices of the products based on the budgeted rate of petroleum levy that stands at Rs30 per litre at present.

The government has imposed petroleum levy of Rs21.04 per litre on petrol and Rs22.11 on high speed diesel.

Moreover, the government had inserted a provision in the budget to charge the rate of petroleum levy by up to Rs30 per litre on the products.

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In addition to the petroleum levy, the government is also charging 17% general sales tax (GST) on the petroleum products. Based on the GST and budgeted rate of petroleum levy, the regulator had worked out an increase of Rs14.75 per litre on diesel and Rs16 per litre increase on petrol.

During the last two-and-half months, the government had increased the price of petrol by Rs11.21 per litre, HSD (Rs14.64), kerosene (Rs14.90) and light diesel oil by Rs16.37 per litre since December 1, 2020.

According to sources, Ogra has prepared a summary on Rs30 per litre petroleum levy and asked the government to jack up the price of petrol by up to Rs16 from February 16.

The summary has been sent to the Petroleum Division. The Ministry of Finance will take the final decision in consultation with Prime Minister Imran Khan. On February 1, the government had increased the price of petrol by Rs2.70 per litre after approval from the premier.