Increase of 3 to 6 per cent expected in oil prices

OGRA, however, has recommended no change in prices for February.

ISLAMABAD:

Consumers may face an increase of 6 per cent or Rs6.29 in oil prices per litre from February 1 following a rise in crude prices in the international market, government officials say.

However, the Oil and Gas Regulatory Authority (Ogra), in its calculations sent to the Ministry of Petroleum and Natural Resources on Monday, recommended keeping oil prices unchanged for February. New prices for petroleum products will be announced today (Tuesday).

For January too, the government had increased prices of petrol by Rs1.65 per litre and high octane blending component (HOBC) by Rs5.13 per litre despite a decline in international crude prices and Ogra’s recommendation to keep prices unchanged. However, prices of other petroleum products were left unchanged.

According to the officials, for February the price of petrol may be increased by Rs5.37 per litre (6 per cent), high-speed diesel (HSD) by Rs3.11 per litre (3 per cent), high octane blending component (HOBC) by Rs6.29 per litre (6 per cent), kerosene oil by Rs2.78 per litre (3 per cent) and light diesel oil (LDO) by Rs3.43 per litre (4 per cent).

In the international market, average crude oil price has jumped $4 to $114 per barrel in January compared to $110 in December 2011. The rupee has also depreciated by 1.2 per cent to Rs90.3 per dollar compared to Rs89.3 in December, making oil imports expensive.

Currently, petrol is being sold at Rs89.54 per litre, kerosene oil at Rs89.24 per litre, HOBC at Rs111.91 per litre, LDO at Rs86.78 per litre and HSD at Rs98.82 per litre.

Ogra sources said the government had collected Rs9 billion additional revenue on account of general sales tax and petroleum levy on petroleum products in six months (July-December) of current fiscal year 2011-12 compared to the corresponding period of last year.

If the government kept oil prices unchanged, it would have to bear an impact of Rs3 billion in the shape of lost sales tax and petroleum levy in February, sources said, adding the amount could be absorbed as the government had collected Rs9 billion additional revenue in the first six months. They said Ogra had strongly recommended to the government not to pass on the impact to the consumers who were already paying a significant amount in petroleum levy.

The government has already deregulated prices of many petroleum products including motor spirit (petrol), HOBC, LDO, jet fuels JP-1, JP-4 and JP-8 from June last year. This means refineries and oil marketing companies can announce ex-refinery and ex-depot prices on a monthly basis keeping in view the import prices. However, in a controlled mechanism, the government notifies prices after fixing inland freight equalisation margin and petroleum levy, which come under its domain.

Published in The Express Tribune, January 31^st, 2012