ISLAMABAD, Oct 10: The government has decided in principle to reduce petroleum prices from Oct 15 in the wake of a 25 per cent decline in international oil prices over the past two months.
Sources told Dawn on Tuesday that ex-refinery price of diesel was reduced by about Rs3 per litre to Rs30.13 on Oct 9, 2006 from Rs33.34 about two months ago. Similarly, the ex-refinery price of motor spirit was also decreased by about Rs4 per litre to Rs26.13 from Rs30.52.
The decision was taken at a meeting of oil refinery and petroleum ministry officials on Tuesday, which also discussed a proposal to reduce the deemed duty on petroleum products, bringing them to an average of 7.5 per cent from existing average 10 per cent level.
The meeting, presided over by secretary petroleum Ahmad Waqar, was informed that the government had been severely criticised for a long time for charging such a high rate of duty that ‘unnecessarily protected rusted and run-down machinery’.
The reduction in deemed duty would automatically reduce product prices by 30-40 paisa per litre. The government currently charges Rs2.06 and Rs3.34 per litre deemed duty on kerosene and high-speed diesel.
It was agreed that international oil prices had declined by about 25 per cent from $80 per barrel to $60 per barrel while prices in the Gulf from where Pakistan imports most of the products was even lower. As such, the meeting generally reached the conclusion that the diesel prices should be reduced by over Rs3 per litre, but the exact size would be worked out on Oct 14 with the prime minister’s approval.
Similarly, the price of motor spirit could also be reduced by about Rs2.5 per litre if pure technical calculations were made, a participant of the meeting told Dawn but said a final decision would also be made by the prime minister because it involved about Rs13 per litre petroleum development levy.
Another official said the government had almost recovered the loss it suffered when it froze oil prices since start of the financial year in July.
Last month, the World Bank had also criticised the government for charging higher ocean losses and handling charges to consumers.
The bank had also criticised the government for deemed duty which it said was designed to protect refineries at the cost of consumers, which it said, was highly questionable.
Ihtasham ul Haque adds: Secretary Petroleum Ahmad Waqar said although the prices of petroleum products and crude oil have shown declining trends in the international market during the past three fortnights but it has been utilised to adjust petroleum differential claims and subsidy on HSD, kerosene and LDO.
