ISLAMABAD, Nov 25: Prices of petroleum products are estimated to increase by about 5 per cent or Rs4-5 per litre on Nov 30 because of rising prices in the international market.

The surge in the prices of oil and a higher than anticipated increase in that of natural gas is likely to push the rate of inflation higher than the 9.5 per cent estimated in the federal budget and subsequently revised to 14.5 per cent.

Informed sources told Dawn on Thursday that the prices of almost all petroleum products had risen substantially in the international market and that would be passed on to consumers later this month.

Simultaneously, the Oil and Gas Regulatory Authority (Ogra) is expected to revise upwards the prescribed prices of gas in a few days on separate tariff petitions of Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL), seeking increase of up to a 13 per cent. Through their separate petitions, the SSGCL has sought an increase of Rs28 per unit and the SNGPL of Rs40.

Ogra has almost completed its assessment of revenue requirements of the two gas utilities for the current year but has not yet made up its mind about the size of price increase. The increase in gas prices will be effective from Jan 1.

The sources said the prices of petrol and kerosene would go up by about Rs4 to Rs4.50 per litre and that of diesel by Rs5 per litre. This will be the second increase in prices during the current year. Last month, the prices were increased by up to 9 per cent.

The prices touched a peak of Rs86.66 per litre during April-September 2008 and declined to their lowest level of Rs56.21 per litre in June last year.

As a result of the increase, the government’s revenue on oil products will go up because of flexible general sales tax which moves up with the price rise. Last year the government is reported to have collected about Rs315 billion on oil prices, including Rs115 billion as GST on domestic sales.

Besides a 16 per cent variable general sales tax on all petroleum products charged to consumers, the government also collected a fixed petroleum levy at the rate of Rs10 per litre on petrol, Rs14 on high octane blending component, Rs6 on kerosene, Rs3 on LDO and Rs8 on high speed diesel.

The price increase will propel the rate of inflation and cost of industrial production which is already under pressure because of higher electricity and gas tariffs and energy shortfalls.

As a result of increased import prices, profit margins of dealers and oil marketing companies increased by 11per cent last month and the rate of GST collected by the government surged by up to 9 per cent. This is because the dealer commission and company margin are payable at the rate of 4 and 5 per cent, respectively, while the GST at 16 per cent results in higher revenue for the government.