Energy costs: Petrol prices rise by 5.7%, power prices to go down 20%
Diesel costs to rise by 3.7%; govt absorbs price increase on other petroleum products
Diesel costs to rise by 3.7%; govt absorbs price increase on other petroleum products.
ISLAMABAD:
In line with expectations, the government announced that it would allow domestic oil companies to increase petrol prices by 5.7% for the month of April, effective April 1 (today), as global prices of oil continue to rise. But the government also announced a decrease in electricity prices for consumers throughout the country, in addition to leaving the prices of many other petroleum products unchanged.
Petrol, the most commonly used fuel for non-commercial vehicles, will now cost Rs74.29 per litre, up Rs4 or 5.7% compared to last month. High speed diesel, the most common fuel for commercial vehicles and generators for agriculture in rural areas, will see its price rise by Rs3 per litre, or 3.7%, to Rs83.61 per litre.
The prices of kerosene and light diesel oil, the fuels used by some of the poorest Pakistanis in areas without access to other fuels, will remain unchanged at Rs61.44 per litre for kerosene and Rs57.94 per litre for LDO. Somewhat surprisingly, the prices of High Octane Blended Component (HOBC), a fuel used almost exclusively for luxury cars, will also remain unchanged at Rs80.31 per litre. For the second time this year, the prices paid by wealthier Pakistanis to fuel their luxury cars will be lower than the prices paid by farmers to fuel their tractors and tube well generators.
The Oil and Gas Regulatory Authority (Ogra) had proposed a 9.6% increase in HOBC prices, since it is a fuel used by people who are usually indifferent to price increases and can thus form a significant source of revenue. That proposal appears to have been rejected. Diesel’s importance as a fuel in the farming community means that increase in HSD prices can almost directly translate into an increase in food prices.
The announcements for fuel price changes were made by Finance Minister Ishaq Dar on Tuesday. Direct announcements by federal cabinet ministers for oil prices are somewhat unusual, but have become a regular feature of the Nawaz Administration. In the preceding Zardari and Musharraf administrations, they were usually done by Ogra issuing notices.
Even the press release issued by Nawaz Administration announcing April’s price changes was by the finance ministry, not the petroleum ministry, the ministry that has jurisdiction over petroleum prices. The front-and-centre role being played by the finance minister suggests that Petroleum Minister Shahid Khaqan Abbasi appears to have been effectively sidelined in decision-making within the cabinet, even on matters than fall directly under his purview.
Ostensibly, the main reason for the finance minister’s involvement in the decisions about oil prices have to do with the statutory regulatory orders used by Dar to arbitrarily increase the sales tax on petroleum products in January and February, in a bid to protect government revenues from a fall in oil prices.
Electricity prices
The National Electric Power Regulatory Authority (Nepra) announced decreases in prices throughout the country, with much of the country set to experience up to a 20% decrease in electricity prices. The state-owned electricity distribution companies that serve the entire country except Karachi will lower prices by an average of Rs2.08 per kilowatt-hour (kWh), with the reference fuel cost going down from Rs11.36 per unit to Rs9.27 per unit for the month of January.
Customers of the privately-owned K-Electric will see their prices decrease by an average of Rs1.23 per unit based on the fuel cost adjustment for December 2014.
Published in The Express Tribune, April 1st, 2015.
In line with expectations, the government announced that it would allow domestic oil companies to increase petrol prices by 5.7% for the month of April, effective April 1 (today), as global prices of oil continue to rise. But the government also announced a decrease in electricity prices for consumers throughout the country, in addition to leaving the prices of many other petroleum products unchanged.
Petrol, the most commonly used fuel for non-commercial vehicles, will now cost Rs74.29 per litre, up Rs4 or 5.7% compared to last month. High speed diesel, the most common fuel for commercial vehicles and generators for agriculture in rural areas, will see its price rise by Rs3 per litre, or 3.7%, to Rs83.61 per litre.
The prices of kerosene and light diesel oil, the fuels used by some of the poorest Pakistanis in areas without access to other fuels, will remain unchanged at Rs61.44 per litre for kerosene and Rs57.94 per litre for LDO. Somewhat surprisingly, the prices of High Octane Blended Component (HOBC), a fuel used almost exclusively for luxury cars, will also remain unchanged at Rs80.31 per litre. For the second time this year, the prices paid by wealthier Pakistanis to fuel their luxury cars will be lower than the prices paid by farmers to fuel their tractors and tube well generators.
The Oil and Gas Regulatory Authority (Ogra) had proposed a 9.6% increase in HOBC prices, since it is a fuel used by people who are usually indifferent to price increases and can thus form a significant source of revenue. That proposal appears to have been rejected. Diesel’s importance as a fuel in the farming community means that increase in HSD prices can almost directly translate into an increase in food prices.
The announcements for fuel price changes were made by Finance Minister Ishaq Dar on Tuesday. Direct announcements by federal cabinet ministers for oil prices are somewhat unusual, but have become a regular feature of the Nawaz Administration. In the preceding Zardari and Musharraf administrations, they were usually done by Ogra issuing notices.
Even the press release issued by Nawaz Administration announcing April’s price changes was by the finance ministry, not the petroleum ministry, the ministry that has jurisdiction over petroleum prices. The front-and-centre role being played by the finance minister suggests that Petroleum Minister Shahid Khaqan Abbasi appears to have been effectively sidelined in decision-making within the cabinet, even on matters than fall directly under his purview.
Ostensibly, the main reason for the finance minister’s involvement in the decisions about oil prices have to do with the statutory regulatory orders used by Dar to arbitrarily increase the sales tax on petroleum products in January and February, in a bid to protect government revenues from a fall in oil prices.
Electricity prices
The National Electric Power Regulatory Authority (Nepra) announced decreases in prices throughout the country, with much of the country set to experience up to a 20% decrease in electricity prices. The state-owned electricity distribution companies that serve the entire country except Karachi will lower prices by an average of Rs2.08 per kilowatt-hour (kWh), with the reference fuel cost going down from Rs11.36 per unit to Rs9.27 per unit for the month of January.
Customers of the privately-owned K-Electric will see their prices decrease by an average of Rs1.23 per unit based on the fuel cost adjustment for December 2014.
Published in The Express Tribune, April 1st, 2015.