OGRA recommends slashing fuel prices

After several months of surging prices, the consumers may see some relief due to possible reduction in prices of high speed diesel (HSD) and petrol.

The government had increased prices of petroleum products during the last several months. Now, the prices are likely to come down for the next fortnight effective from April 1 to 15, 2021.

High speed diesel is widely used in transport and agriculture sectors. Therefore, any reduction in its price will have a positive effect and may cause reduction in inflationary impact. The masses are facing higher rates of inflation due to which Dr Abdul Hafeez Sheikh was removed from the post of finance minister

The Oil and Gas Regulatory Authority (Ogra) on Tuesday recommended slashing prices of petroleum products by up to Rs5.50 per litre approximately for the first half of April (April 1-15).

Credible sources in the Petroleum Division said that the authority has recommended a reduction of Rs1.50 per litre in the price of petrol and Rs5.40 per litre in price of high speed diesel (HSD) with effect from April 1, 2021.

Sources in the Petroleum Division further stated that the federal government may not pass on full relief to the public as it did not pass on full impact of petroleum prices internationally in recent months. Ogra has computed the ex-depot prices on the basis of current petroleum levy and general sale tax rates.

In the second half of March, the federal government raised ex-refinery prices by reducing petroleum levy rates on petroleum products.

In case, the government opts to revise the petrol price downward by Rs1.50 per litre, the prices will come down to Rs110. 40 per litre from the current Rs111.90 per litre. The price of HSD will also be reduced to Rs110.58 per litre from Rs116.08 per litre.

These two products are a major source of revenue for the government.

The government is currently charging two types of taxes on petroleum products. It is charging petroleum levy in addition to collecting general sales tax on petroleum products.

The petroleum levy on petroleum products was supposed to be spent on building infrastructure like developing oil storages. However, the government had not spent it on oil infrastructure, which is why Pakistan has the lowest storage capacity of oil compared to India and Bangladesh.

When global oil prices went down due to the Covid-19 fuelled lockdowns, Pakistan was the only country that had imposed ban on import of cheaper petroleum products whereas other countries like India, Bangladesh and China had imported petroleum products in bulk to fill their storages with cheaper petroleum products.

Published in The Express Tribune, March 31^st, 2021.

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