Cut down: OGRA proposes significant cut in oil prices

Petroleum rates may be reduced by up to Rs5.27 per litre.

ISLAMABAD:

Oil consumers are expected to get a big relief at the start of next month as the industry regulator has suggested a hefty reduction of up to Rs5.27 per litre in prices of petroleum products in line with the global market trend.

In a summary sent by the Oil and Gas Regulatory Authority (Ogra) to the ministries of petroleum and finance on Thursday, the regulator proposed that oil prices should be slashed from February, taking cue from the decrease in international markets.

“The finance ministry will try to convince the prime minister to make only a partial reduction in order to offset the revision in petroleum levy made a month ago,” an official commented.

At the beginning of January, oil prices were to be increased by a maximum of Rs2.91 per litre, but the prime minister held back and gave a New Year gift to the consumers in the form of static petroleum prices.

The government claimed that it would have to bear a subsidy of Rs5.38 billion in the month by slashing the petroleum levy to keep oil prices unchanged.

For February, the government will announce new oil prices today (Friday) after getting the premier’s approval.



According to the Ogra summary, consumers of high-speed diesel, which is mostly used in transport vehicles and the agriculture sector, should be cheaper by Rs5.27 per litre. This will take its price down to Rs111.48 per litre from the existing Rs116.75.

Apart from farmers and transporters, this price reduction could have a favourable effect on the rate of inflation in the country. “If the government is able to force the transporters to cut fares, it will also bring down inflation,” the official said.

Petrol price is also likely to fall by Rs3.04 to Rs109.72 per litre compared to the current Rs112.76.

At present, compressed natural gas (CNG) is not available in several parts of Punjab and a cut in petrol price would provide some relief to the consumers.

Kerosene oil, which is used for cooking purposes in remote areas where liquefied petroleum gas (LPG) is not easily available, may record a decline of Rs4.50 per litre, standing at Rs103.5 against existing price of Rs108.

In winter season, the official pointed out, prices of LPG went up substantially and a drop in kerosene price would provide a cheaper alternative.

The price of light diesel oil, consumed mainly by industrial units, may be cut by Rs4.34 per litre, reaching Rs96.9 compared to the current Rs101.24.

Consumers of high octane blending component, used mainly in luxury vehicles, could see a reduction of Rs4.48 to Rs136.75 per litre compared to Rs141.23 on January 1.

JP-1 price is expected to drop by Rs4.91, standing at Rs95.27 per litre from the existing Rs100.18.

Published in The Express Tribune, January 31^st,  2014.

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