ISLAMABAD: The prices of all petroleum products are set to increase up to 15.6 per cent if the government ignores political challenges and accepts recommendations of the Oil and Gas Regulatory Authority (Ogra).

In its summary to the government, Ogra said prices of all petroleum products had gone up in the international market in October and needed to be passed on to the consumers in November if the government wanted to continue with current high tax rates.

In its working paper based on existing high tax rates, Ogra calculated a 3.56pc increase in petrol price, 2.75pc in high speed diesel, 15.6pc in kerosene and 14.76pc in light diesel oil for next month.

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

Based on existing tax rates and PSO purchases from international market, Ogra worked out the ex-depot price of petrol at Rs66.56 per litre for next month instead of Rs64.27, an increase of 3.56pc.

The regulator estimated the ex-depot sale price of HSD to go up by Rs2 per litre or 2.75pc to Rs74.52 instead of Rs72.52 per litre.

Likewise, Ogra calculated the ex-depot price of kerosene to increase by Rs6.76 per litre (15.6pc) to Rs50 per litre from Rs43.25 per litre.

Also, it worked out ex-depot sale price of light diesel oil at Rs49.74 per litre instead of Rs43.35 per litre, up Rs6.40 per litre or 14.76pc.

Currently, the government is collecting about Rs24 per litre taxes on petrol in the form a fixed sales tax and petroleum development levy. Similarly, the government is collecting about Rs33 per litre taxes on HSD.

Petrol and high speed diesel are the two major products that generate most of revenue in oil sector. 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.

Published in Dawn, October 29th, 2016