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Ogra recommends Rs5.19 hike in HSD price

Ogra recommends Rs5.19 hike in HSD price

ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) recommended on Monday an increase of Rs5.19 per litre in the price of high speed diesel (HSD) and Rs2.49 in that of petrol for November.

It also recommended Rs15.99 per litre increase in the price of kerosene and Rs12.63 in that of light diesel oil (LDO).

If the regulator’s calculations are accepted, the price of kerosene would go up by 33.3 per cent, followed by 27.5pc of LDO. The price of petrol would increase by 3.4pc and that of HSD by 6.5pc. The government is, however, expected to pass on to consumers partial increase recommended by Ogra, an official said, adding that HSD price may go up by Rs3.50 and that of petrol by Rs1.50 per litre.

In a summary sent to the government, Ogra said the adjustment in prices of diesel and petrol was required to pass on the impact of increase in the international market in October.

Therefore, on the basis of existing tax rates and imported cost of Pakistan State Oil (PSO), Ogra calculated the new ex-depot price of HSD at Rs84.59 per litre instead of Rs79.40 for November. Likewise, it worked out the price of petrol at 75.99 instead of Rs73.50.

Ogra recommended new ex-depot price of kerosene at Rs63.99 per litre from existing Rs48, showing an increase of Rs15.99 or 33.3pc. It proposed Rs12.63 increase in the LDO price to Rs58.63 from Rs44.

An Ogra official said the regulator had calculated the prices on the basis of imports made by the PSO in October and notified GST and petroleum levy rates on all products.

He said the summary had been forwarded to the petroleum division as a routine practice which usually sent it onward to the Ministry of Finance and the Prime Minister Office for a decision. Under the practice in vogue, the oil prices are revised on the last day of every month.

The erstwhile Ministry of Petroleum and Ogra have been recommending a substantial increase in the prices of kerosene and LDO for almost two years to minimise a huge price differential with petrol. The ministry believed that a Rs30 per litre price differential between petrol and the two other products was encouraging dishonest market operators to mix kerosene with petrol for higher profits and resulting in adulterated and poor-quality petrol in the market instead of higher grade (92RON) being charged to consumers.

The government has been rejecting these calls, saying it wanted to protect poor people in the past under former prime minister Nawaz Sharif. Interestingly, Prime Minister Shahid Khaqan Abbasi has maintained the status quo, except for Rs4 per litre increase early this month in the price of kerosene.

Kerosene is the only regulated petroleum product but unavailable at fixed rates anywhere in the country, while all other products are deregulated and are available reasonably within the price band announced by the government.

Petrol and HSD are two major products that generate most of revenue for the government because of their massive and yet growing consumption in the country. The current GST rate is 31pc for HSD and 17pc for all other products. In addition, the government is also charging petroleum levy at Rs8 per litre on HSD, Rs10 on petrol, Rs6 on kerosene and Rs3 on LDO.

HSD sales across the country are now going beyond 800,000 tonnes per month against monthly consumption of around 700,000 tonnes of petrol. The sales of kerosene and LDO are generally less than 10,000 tonnes per month.

Published in Dawn, October 31st, 2017

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