ISLAMABAD: The government increased on Monday petroleum levy to the maximum permissible limit but kept the prices of petroleum products unchanged.

“The prime minister has approved ‘no change’ in oil prices,” said a senior official of the Prime Minister’s office. The prime minister desired that an impact of Rs510 million should not be passed on to consumers.

He said the oil price summary forwarded by the Oil and Gas Regulatory Authority (Ogra) had proposed a slight increase in prices.

According to Ogra summary, the price of petrol was to be increased by 84 paisa per litre, of High Octane Blending Component (HOBC) by Rs3.63 per litre, of kerosene by 30 paisa, of high speed diesel by 27 paisa and light diesel oil by 22 paisa.

An Ogra official, however, explained that the regulator was under instructions of the finance minister to prepare a working paper on oil pricing on the basis of budgeted subsidy and not on the basis of actual prevailing prices.

He said that by keeping prices unchanged the government had in fact increased the petroleum levy on all products that would yield an additional Rs800 million. Based on declining international oil market and existing rates in the domestic market, rates of all petroleum products should have come down.

The government decided to charge maximum petroleum levy rates approved by parliament on all products. He said the government was charging Rs8.88 per litre on motor spirit in June which had now been increased to a maximum of Rs10 per litre – an increase of Rs1.21 per litre.

Likewise, the Rs11.87 per litre existing petroleum levy on HOBC has also been increased to Rs14. The petroleum levy on HSD has been increased from Rs6.45 per litre to Rs8 per litre and on light diesel oil to Rs3 from Rs2.13 per litre.

Last month too, the government had kept prices unchanged. Apart from the Rs6 to Rs14 per litre petroleum levy, the government also charges 16 per cent general sales tax on prices of all oil products.

Published in Dawn, July 1st, 2014