ISLAMABAD: While increasing petroleum levy to the maximum, the government on Sunday reduced prices of petroleum products by up to 1.3 per cent to partially pass on impact of declining oil prices in international market.

“On the recommendation of Finance Minister Mohammad Ishaq Dar, Prime Minister Nawaz Sharif has approved reduction in the prices of petroleum products for September,” an official statement said.

Sources said that crude prices had declined in the international market by about seven per cent over the past 30 days but the full impact could not be shared with consumers because of depreciation of rupee against the dollar and the increase in petroleum levy.

Mr Dar held the two parties organising sit-ins in Islamabad responsible and said: “POL prices would have been reduced further, had not the value of rupee depreciated during August due to the ongoing political situation.”

The sources said the government had increased petroleum levy by Rs1.87 per litre on petrol, Rs3.91 per litre on high octane blending component (HOBC) and 53 paisa per litre on high speed diesel.

The levy on kerosene and light diesel was kept unchanged at its existing maximum limit. “Now, petroleum levy is full, up to maximum budgeted level,” a government official said.

The ex-depot price of petrol has been fixed at Rs106.56 per litre, down by Rs1.41 from Rs107.97. The ex-depot price of high speed diesel has been set at Rs108.34 per litre, down by Re1 per litre from Rs109.34.

The price of HOBC has been reduced by Rs1.62 per litre to Rs133.01 from Rs134.63 and that of light diesel oil by Rs1.19 per litre to Rs92.08 from Rs93.27.

The price of kerosene, used by majority of households in remote areas of the country for cooking, heating and lighting, has been decreased by an insignificant six paisa per litre to Rs96.99 per litre from Rs97.05.

Had the government kept the petroleum levy rates unchanged, petrol price would have dropped by Rs3.28 per litre, HOBC by Rs5.53 per litre and high speed diesel by Rs1.53 per litre.

Crude prices decreased from about $106 a barrel to $99 a barrel in August. The rupee depreciated from Rs99 to Rs102 against a dollar during the month.

For the last month, the government had not increased the prices of petrol, diesel and HOBC even though the Oil and Gas Regulatory Authority had proposed an increase in their prices and a reduction in the prices of kerosene and light diesel oil.

The prime minister had allowed cut in kerosene and light diesel oil prices but rejected increase in the prices of other products.

Apart from the Rs6 to Rs14 per litre petroleum levy, the government charges 16 per cent general sales tax on the prices of all oil products.

Published in Dawn, September 1st, 2014