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| 17 December 2004 | Friday | 04 Ziqa'ad 1425 |
Increase in POL prices defended
ISLAMABAD, Dec 16: The decision to increase the prices of petroleum products, by 6.25 to seven per cent was made to stop the 'haemorrhage beyond a certain barrier' and was based on the principle of fiscal prudence, said Secretary Petroleum Ahmad Waqar.
Mr Waqar told newsmen here on Thursday that in the last seven months (since May 1, 2004), the government had lost Rs34 billion, including a petroleum development levy of Rs23 billion and Rs11 billion in price differential claims to oil marketing companies and refineries, to maintain constant prices.
But the data obtained from the petroleum ministry suggest that international oil prices had dropped by up to Rs2.22 per litre in the last 15 days and the directorate-general of oil was expecting a cut or status quo in prices.
Even if the Rs4.5 billion loss of the last fiscal year was excluded, he said, still the loss stood at Rs29.5 billion. He said the decision would have no inflationary pressure because it carried small weight in the overall inflation basket.
The government would earn nothing in petroleum development levy (PDL) and only pay the difference in prices to the oil marketing companies (OMCs), he said and added the government would lose Rs2 billion PDL in the next fortnight.
He denied a report that the prices had been increased on the instructions of the prime minister received from Beijing on Wednesday night and said it was a 'government decision'. The international price had started increasing once again after sliding recently, he said.
THE SECRETARY SAID: "This in my view is because China and India are ready to purchase petroleum products at any cost to meet their demand in the economic growth, besides the cut in production announced by some oil producing countries and increased demand in North America."
The data collected by Dawn from the petroleum ministry, however, suggest that the government has also increased petroleum development levy (PDL) and earned higher sales tax proceeds.
The data showed that prices of petrol, HOBC, kerosene, high speed diesel, light diesel, JP-1 and JP-4 had declined by Rs1.01 per litre, Rs1.03, Rs2.22, Rs1.41, Rs1.75, Rs2.09 and Rs1.61 per litre respectively in the last 15 days i.e., between Dec 1 and 15.
The PDL on petrol, HOBC, kerosene, HSD and light diesel has been increased from zero to 92 paisa per litre, Rs1.13 per litre, 70 paisa per litre, 91 paisa per litre and 78 paisa per litre respectively.
Similarly, the inland freight margin (IFM) on petrol has been increased by Rs1 per unit from Rs8.70 to Rs9.70. The IFM on HOBC has been increased by Rs1 per litre from Rs11.24 to Rs12.24 per litre.
The IFM on kerosene and HSD has been increased from zero to 70 paisa and 12 paisa per litre respectively. The IFM on light diesel has been increased from 13 paisa per litre to 66 paisa per litre.
The change in POL prices will have a total impact of Rs960 million over a period of 15 days. Of this, Rs515 million will be adjusted as price differential claims, Rs154 million as inland freight margin, Rs89.76 million as PDL and Rs125 million as sales tax. Another amount of Rs35 million will go to the oil companies as OMC's margin and Rs40 million to the dealers as commission.
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