ISLAMABAD, Dec 12: The government has decided not to reduce oil prices in the wake of falling international prices for the time being and recover instead the losses it suffered over the past few months by not passing on the impact of rising crude prices over the past few months to consumers.

"The petroleum ministry has submitted a detailed analysis of the prices of petroleum products at home and abroad which is quite encouraging but the government will not cut domestic POL prices for the time being," an official of the ministry of finance told Dawn on Sunday.

He said the government had lost Rs33 billion revenue as oil subsidy in five months (July-November) of the current fiscal year to maintain domestic prices, even though the international market had witnessed oil prices touching all-time highs.

An official said the oil prices in the Arab-Gulf region had dropped to $33 per barrel and the government had started earning $3 per barrel at the current rate after setting aside taxes and oil companies' share. He said the government was earning profit on oil prices for the last one month.

"Since the government did not increase the prices for more than six months and sustained heavy losses by absorbing the impact of high international prices, it feels justified in recouping a part of this loss, if not all, by maintaining a status quo in domestic prices for the time being," said the finance ministry official.

He, however, said the government had not done away with the policy decision of quarterly price adjustment. "It was an unusual situation and was dealt with special care while quarterly price adjustment is a considered policy with long-term objectives," he said.

He said the government had started providing subsidy on oil prices when they were pegged at $42 per barrel in the Gulf region - a difference of $9 per barrel. The petroleum prices in the region touched a maximum of $45 per barrel mark a couple of months ago before sliding down. Compared to this, the crude prices in the US and the UK even topped $58 per barrel.

Pakistan's domestic petroleum prices are linked with Arab-Gulf region and are adjusted every fortnight by Oil Companies Advisory Committee (OCAC) on the basis of previous 15-day average price published in the Platte's magazine.

Pakistan's total oil consumption, including furnace oil and other petroleum products, is around 16.5 million tons per year. Of this, about 11 million tons are imported and the rest is met through local production.

The government had decided in May this year not to pass on the impact of rising international oil prices to consumers to avoid a negative impact on economic growth. As such, the government had brought down to zero its share of Petroleum Development Levy.

The government had projected an oil and gas based revenue target of about Rs70 billion for fiscal year 2004-05. Officials claimed the government had already lost Rs33 billion of this target in five months.

However, official data available with Dawn suggest the government actually collected Rs12.6 billion on account of oil and gas surcharges and royalties in the first three months (July-September) against a quarterly target of Rs19.7 billion.

In all, the government collected Rs29 billion revenue on account of surcharge and royalties on oil and gas and defence earnings during the first quarter of the current fiscal year, Rs8 billion higher than the quarterly target of Rs20.7 billion.

The government had estimated royalties on oil and gas at Rs16.6 billion for the whole year in the federal budget 2004-05. It has earned Rs4.324 billion on this account in the first quarter.

Similarly, the government had set an annual target of Rs15 billion for the gas development surcharge. It has earned Rs4.661 billion in the first three months of the fiscal year.

The government had set an annual target of Rs11.6 billion revenue from defence services. The target has substantially been surpassed in the first quarter of the current fiscal year. The defence revenue during the first three months of the year had amounted to Rs17.166 billion.

The government was expected to maintain the same pattern in defence earnings owing to its continuous support to the US and end up earning about Rs69 billion at the end of the year.