Petrol prices cut by 1.3%
Ogra had originally recommended a price decrease of Rs2.69 per litre, or 3%, to Rs75.10 per litre
Ogra had originally recommended a price decrease of Rs2.69 per litre, or 3%, to Rs75.10 per litre. PHOTO: FILE
ISLAMABAD:
The government on Friday decided to allow petrol prices to decline by 1.3%, in what appears to be an attempt at striking a balance between the need to keep government tax revenues steady and keeping the electorate happy by passing on the effects of lower global oil prices to consumers.
In its recommendations sent to the Petroleum Ministry on Thursday, the Oil and Gas Regulatory Authority (Ogra) had proposed sharper cuts in the prices of petrol, diesel, and kerosene. However, that proposal ran into opposition from the Finance Ministry, which has committed to the International Monetary Fund that it will raise tax revenues.
Over 25% of government revenues come from the energy sector, and much of that comes from oil. As oil prices began declining late last year, the government saw a precipitous drop in its revenues from the taxes on oil, resulting in the fiscal deficit becoming wider.
Under the new prices approved by Prime Minister Nawaz Sharif, and effective from Saturday for the next month, petrol prices will be cut by Rs1.03 per litre, or 1.3%, from Rs77.79 per litre to Rs76.76 per litre. Petrol is the most widely used fuel by cars and motorcycles owned by middle class commuters. Ogra had originally recommended a price decrease of Rs2.69 per litre, or 3%, to Rs75.10 per litre.
Prices of high-speed diesel, a fuel used by transportation businesses and farmers, will go down by Rs2.06 per litre, or 2.4%, from Rs87.11 per litre to Rs85.02 per litre. Ogra’s initial proposal had called for a Rs5.48 per litre, or 6% reduction in its price, to Rs81.63 per litre.
For light diesel oil (LDO), an industrial fuel, prices will come down by Rs4.92 per litre, or 8%, from Rs61.51 per litre to Rs56.59 per litre. If Ogra’s proposal had been accepted, LDO prices would have come down by 10%, or Rs6.33 per litre, to Rs55.18 per litre.
Kerosene oil, used as a fuel by the poorest of Pakistanis, will see its price decline by Rs4.83 per litre, or 7.4%, from Rs64.94 per litre to Rs60.11 per litre. Ogra has proposed a 10% cut, or Rs6.33 per litre, in kerosene prices, down to Rs58.61 per litre.
The only fuel for which the government accepted Ogra’s recommendation completely was high-octane blended component (HOBC), a fuel used by luxury cars, where prices will decline by Rs1.02 per litre, or 1.2%, taking the price from Rs83.81 per litre to Rs82.79 per litre. Ogra had proposed a Re1 price cut.
Over the past several months, Finance Minister Ishaq Dar has frequently resisted allowing prices to drop, and frequently proposes temporary tax hikes as a means of keeping prices steady but increasing government revenues. The difference between Ogra’s proposals and the final prices will be accounted for by higher taxes on fuel.
Fluctuations in global oil prices have meant that the average price of Arab Light Crude that landed at Pakistani ports over the last month was $56.57 per barrel against $ 61.19 per barrel in the previous month.
Published in The Express Tribune, August 1st, 2015.
The government on Friday decided to allow petrol prices to decline by 1.3%, in what appears to be an attempt at striking a balance between the need to keep government tax revenues steady and keeping the electorate happy by passing on the effects of lower global oil prices to consumers.
In its recommendations sent to the Petroleum Ministry on Thursday, the Oil and Gas Regulatory Authority (Ogra) had proposed sharper cuts in the prices of petrol, diesel, and kerosene. However, that proposal ran into opposition from the Finance Ministry, which has committed to the International Monetary Fund that it will raise tax revenues.
Over 25% of government revenues come from the energy sector, and much of that comes from oil. As oil prices began declining late last year, the government saw a precipitous drop in its revenues from the taxes on oil, resulting in the fiscal deficit becoming wider.
Under the new prices approved by Prime Minister Nawaz Sharif, and effective from Saturday for the next month, petrol prices will be cut by Rs1.03 per litre, or 1.3%, from Rs77.79 per litre to Rs76.76 per litre. Petrol is the most widely used fuel by cars and motorcycles owned by middle class commuters. Ogra had originally recommended a price decrease of Rs2.69 per litre, or 3%, to Rs75.10 per litre.
Prices of high-speed diesel, a fuel used by transportation businesses and farmers, will go down by Rs2.06 per litre, or 2.4%, from Rs87.11 per litre to Rs85.02 per litre. Ogra’s initial proposal had called for a Rs5.48 per litre, or 6% reduction in its price, to Rs81.63 per litre.
For light diesel oil (LDO), an industrial fuel, prices will come down by Rs4.92 per litre, or 8%, from Rs61.51 per litre to Rs56.59 per litre. If Ogra’s proposal had been accepted, LDO prices would have come down by 10%, or Rs6.33 per litre, to Rs55.18 per litre.
Kerosene oil, used as a fuel by the poorest of Pakistanis, will see its price decline by Rs4.83 per litre, or 7.4%, from Rs64.94 per litre to Rs60.11 per litre. Ogra has proposed a 10% cut, or Rs6.33 per litre, in kerosene prices, down to Rs58.61 per litre.
The only fuel for which the government accepted Ogra’s recommendation completely was high-octane blended component (HOBC), a fuel used by luxury cars, where prices will decline by Rs1.02 per litre, or 1.2%, taking the price from Rs83.81 per litre to Rs82.79 per litre. Ogra had proposed a Re1 price cut.
Over the past several months, Finance Minister Ishaq Dar has frequently resisted allowing prices to drop, and frequently proposes temporary tax hikes as a means of keeping prices steady but increasing government revenues. The difference between Ogra’s proposals and the final prices will be accounted for by higher taxes on fuel.
Fluctuations in global oil prices have meant that the average price of Arab Light Crude that landed at Pakistani ports over the last month was $56.57 per barrel against $ 61.19 per barrel in the previous month.
Published in The Express Tribune, August 1st, 2015.