Petroleum products: NA body, OGRA unable to agree on pricing

Govt officials rule out possibility of providing subsidy.

ISLAMABAD:

Another increase in prices of petroleum products seems imminent after the finance ministry and planning commission on Tuesday opposed the option of providing subsidy to keep oil prices at the same level in March.

Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Sheikh, before the meeting of the special committee to review oil prices, said that the state of the economy does not allow the government to provide subsidy on oil prices. The panel will meet again today (Wednesday) to finalise the proposals.

National Assembly’s special committee leaned towards increasing oil prices by up to Rs8.67 per litre on March 1 saying that the cash-starved government could not absorb the rising impact of global oil prices.

Meanwhile, Oil and Gas Regulatory Authority (Ogra) stuck to its stance and recommended the federal government to keep oil prices unchanged for next month, an official said adding that the government would have to sacrifice Rs3.5 to Rs4 billion potential revenue to keep oil prices unchanged.

If the government decides to keep oil prices unchanged, it would need to increase its borrowing level, print more currency notes and swell the size of the budget deficit, a senior official of the petroleum ministry said while quoting Hafeez Sheikh. The panel held an in-camera session and kept the doors closed for the media.

An official said that Planning Commission Deputy Chairman Dr Nadeemul Haque presented a proposal to provide subsidy to motorcyclists by giving discount cards and opposed a subsidy for cars and other vehicles saying that they could afford the proposed hike.

The special committee of National Assembly (NA) was formed by NA Speaker Fehmida Mirza on February 15 to review the oil prices increase for February.

The price of high octane will go up by Rs8.67 to Rs126.87 per litre, petrol by Rs2.75 to Rs97.66, Light Diesel Oil (LDO) by Rs3.08 to Rs93.29, High Speed Diesel (HSD) by Rs106.28  and kerosene by Rs4.38 to Rs96.40 per litre for the month of March due to hike in global oil prices, according to Ogra estimates.

GST collection from petroleum products stood at Rs146 billion in the first six months of fiscal 2012 against last year’s collection of Rs 114 billion, according to FBR officials.

Rana Tanveer Hussain from PML-N proposed to decrease the petroleum levy by up to 50% to reduce prices of petroleum products for next month, while Farooq Sattar was of the view that reduction in General Sales Tax (ST) would also lead to a cut in oil prices.

Cess on CNG to be increased

Compressed natural gas (CNG) is going to become more expensive as the government has planned to impose the remaining 40 per cent gas infrastructure development cess on the fuel that may raise prices by Rs5 to Rs6 per kg, sources told The Express Tribune.

So far, the government has imposed 60 per cent cess on CNG and wants to impose the remaining 40 per cent that is expected to be notified today (Wednesday).

“We will not accept the imposition of the remaining 40 per cent cess that will push prices up,” said Abdullah Ghayas Paracha, Chairman of All Pakistan CNG Association.

Published in The Express Tribune, February 29^th, 2012.