Govt bypasses POL pricing formulas

The government bypassed standard pricing formulas to impose heavy levies and premiums on consumers as it further raised the prices of petrol and high speed diesel (HSD) by Rs27 on Friday.

According to sources within the Oil and Gas Regulatory Authority (Ogra), petrol prices were not slated for an increase under the standard pricing formula.

However, the government imposed a massive Petroleum Levy of Rs26.77 per litre on petrol. With this latest addition of approximately Rs27, the total levy on petrol skyrocketed from Rs80 to Rs107 per litre.

Similarly, HSD consumers were deprived of potential relief. According to the text of the official notification, diesel prices were supposed to be reduced.

Instead, the government made it Rs26.77 per litre more expensive. Sources said this specific hike in diesel price was implemented to facilitate premium payments to the Pakistan State Oil (PSO).

This sudden and unexpected move sent shockwaves through the industry.

According to sources, the government's decision came as a complete surprise to oil marketing companies (OMCs), which expressed astonishment over the uncalculated price hikes.

Prime Minister Shehbaz Sharif on Friday jacked up prices of both HSD and petrol by Rs27 per liter despite the fact that no increase was required in the rates of petrol and to push its price higher the premier imposed nearly Rs27 per litre more tax on fuel.

HSD price was fixed at Rs380.2 per litre, up from Rs353.42 per litre. This marked a 7.5% increase. Diesel prices were still significantly lower than their peak of Rs520.4 on April 10. HSD is considered the most inflationary fuel due to its widespread use in the transportation and agriculture sectors.

The prime minister approved increasing petrol prices to Rs393.4 per litre, up from Rs366.6. This shows an increase of 7.3% over the existing prices. Petroleum Division officials said there was no change in petrol prices in the international market and the rates had to be jacked up due to an increase in the tax.

The government, meanwhile, provided historic relief to consumers of kerosene oil by slashing the fuel's price by Rs63.60 per litre.

Following this major reduction, the new price of kerosene oil has been fixed at Rs365.21 per litre. This marks the second consecutive week of significant relief for kerosene users, following a price reduction of Rs21.34 per litre announced just last week.