The Oil and Gas Regulatory Authority (Ogra) had proposed that the price increases not be passed on to the consumer. However, the finance ministry turned down that idea, concerned it would affect revenue collection on account of the petroleum levy.
Curiously, the government raised the price of high speed diesel on the same day a National Assembly standing committee on petroleum and natural resources strongly opposed such increases.
The parliamentary panel had feared that an increase in the price of diesel would affect the agriculture sector and also trigger a rise in inflation. The prices of kerosene oil and light diesel oil (LDO) have also been increased by Rs3.48 and Rs4.79 per litre, respectively.
However, the government has kept the price of high octane blending component (HOBC) at Rs106.72 per litre for December. The price of HOBC had declined by Rs1.60 per litre, in line with global oil prices, but the government adjusted it in the petroleum levy to enhance revenue collection on petroleum products.
After the government’s decision, the new price of diesel for December will be Rs98.94 per litre, petrol Rs87.96 per litre, kerosene oil Rs89.24 per litre and LDO Rs86.78 per litre. LDO is used as fuel in pumps and machines mainly used in rural areas. Though the federal government has deregulated the prices of most petroleum products, including petrol, HOBC, LDO, jet fuels JP-1, JP-4 and JP-8 since June 2011, prices are still determined by the government.
The government had cut oil prices to Rs5.93 per litre, in line with global oil price reductions in November. Though the price of high speed diesel had fallen by Rs0.18 per litre, the government adjusted it in the petroleum levy and decided to maintain the price.
Published in The Express Tribune, December 1st, 2011.
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