The trepidation surrounding the likely increase of up to 5.5% in petrol prices from July 1 to match up to the change in oil prices in the international market died down on Tuesday after Prime Minister Nawaz Sharif rejected the petroleum ministry’s summary recommending the price hike.
Instead Premier Nawaz announced a subsidy of Rs2.5 billion to offset the difference in prices of petroleum products. “With the aim to facilitate the public during the holy month of Ramazan, the government will not increase the prices of petroleum products,” he said during his address at the ground-breaking ceremony of the Islamabad Expressway widening project.
The prime minister said that according to the proposal forwarded to him by the petroleum ministry, the Oil & Gas Regulatory Authority (Ogra) had recommended an increase of Rs4.26 per litre in petrol prices. “However, I turned down the proposal to ensure there is no price hike during the holy month.”
Read: Energy costs: Petrol prices likely to go up 5.5% in July
According to the summary, the price of kerosene oil was to be increased by Rs0.67 per litre, besides a sharp increase of Rs7.30 per litre in the rate of high octane blending component (HOBC).
Ogra had also proposed a decrease in the rates of high speed diesel (HSD), light diesel oil (LDO) and jet propellant (JP) fuel: HSD prices were to be cut by Rs0.60 per litre, LDO by Rs0.08 per litre, JP-1 by Rs2.55 per litre, JP-2 by Rs2.05 per litre and JP-3 by Rs2.55 per litre.
The finance ministry also issued a statement on Tuesday, saying that petroleum prices would not be changed during July and shall remain the same as they were in June.
Finance Minister Ishaq Dar, who is currently in Beijing on an official visit, said in the statement that the government had made the decision to facilitate the people in the holy month of fasting. “Ogra’s proposal was turned down because it would have placed an immense burden on the consumers.”
Read: Govt leaves petroleum prices unchanged for May
Petrol prices would remain unchanged at Rs77.79 per litre while the rates of HSD, which is used mostly in the transport and agricultural sectors, would stand at Rs87.12 per litre. HSD is a substitute for compressed natural gas (CNG) and its production has increased because of shutdown of CNG retail outlets across Punjab. Now, the government is supplying liquefied natural gas at these CNG stations, which might lead to a reduction in its demand.
Prices of kerosene oil, which is used for cooking purposes in remote areas where liquefied petroleum gas is not readily available, would remain the same at Rs64.94 per litre.
Rates of LDO, mainly used for industrial purposes, would stand at Rs61.51 per litre while the prices of HOBC, mainly used in luxury cars, would continue at Rs83.81 per litre.
Published in The Express Tribune, July 1st, 2015.