ISLAMABAD: Based on existing high tax rates, the Oil and Gas Regulatory Authority (Ogra) on Friday worked out up to 9 per cent increase in the prices of petroleum products for August 2016 despite a fall in international prices.

An official said the government was expected to pass on the proposed increase to consumers in view of the fact that it had maintained oil prices by absorbing a revenue loss of Rs3 billion.

In a summary sent to the government, Ogra reported increase in the international oil prices in major part of July which required to be passed on to the consumers unless the government cuts tax rates.

The crude prices in the Middle East, the source of Pakistan’s oil imports, had hovered around $47 per barrel in major part of July but then fell below $44 per barrel. Most of import shipments had already been booked at the higher rate.

In its working paper, Ogra recommended an increase of 3.29pc in the price of petrol, 9.10pc raise in kerosene, 0.82pc in high octane blending component (HOBC) and 0.35pc in high speed diesel and proposed almost 3pc cut in light diesel oil (LDO).

Ogra forwarded its working paper to the government on the basis of existing tax rates under instructions from Finance Minister Ishaq Dar. A final decision about the adjustment in oil prices would be announced on Sunday.

Based on existing tax rates and PSO purchases from the international market, Ogra worked out an increase of Rs2.12 per litre (3.29pc) in the ex-depot price of petrol (motor gasoline) for July to Rs66.39 per litre from Rs64.27.

The regulator estimated the ex-depot sale price of HSD to go up by 0.35pc, or 26 paisa, per litre to Rs72.78 instead of Rs72.52 per litre.

Likewise, Ogra calculated the price of high octane blending component at Rs73.28 per litre instead of Rs72.68 per litre, with an increase of 60 paisa per liter.

The Ogra also recommended ex-depot price of kerosene to increase by R3.94 per litre (9.10 pc) to Rs47.19 per litre from Rs43.25per litre.

On the other hand, Ogra worked out ex-depot sale price of light diesel oil at Rs42.11 per litre instead of Rs43.35 per litre, down 2.86pc.

Currently, the government is collecting about Rs25 per litre taxes on petrol in the form a fixed sales tax and petroleum development levy. Similarly, the government is collecting about Rs35 per litre tax on HSD.

Petrol and high speed diesel are the two major products that generate most of revenue in oil sector. The HSD sales across the country are average 600,000 tonnes per month against monthly consumption of around 400,000 tonnes of petrol while kerosene sales are less than 10,000 tonnes per month and that of HOBC less than 6,000 tonnes per month on average.

Published in Dawn, July 30th, 2016

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