ISLAMABAD: Oil and Gas Regulatory Authority (Ogra) on Monday recommended up to seven per cent increase in the prices of petroleum products for April.
According to a working paper submitted to the finance ministry, Ogra recommended the increase because of an upsurge in oil prices in the international market.
During the last couple of weeks crude prices went up to $51.32 per barrel in the international market after Saudi Arabia and its allies launched air strikes against rebels in Yemen.
The oil prices will further go up if war prolongs, an official familiar with the situation told Dawn.
Ogra has recommended an increase of Rs4.44 (6.31pc) in the price of petrol from Rs70.29 to Rs74.73; an increase of Rs6.25 (7.75pc) in high speed diesel (HSD) to Rs86.86 from Rs80.61.
The regulator also seeks to raise the price of High Octane Blending Component (HOBC) by Rs7.66 per litre (9.53pc) to Rs87.97 from Rs80.31; kerosene by Rs1.56 (2.53pc) to Rs63 from Rs61.44 and light diesel oil (LDO) by Rs2.55 (4.40pc) to Rs60.5 from Rs57.94.
A source in Ogra said that the price adjustments in petroleum products were made on the basis of 18pc general sales tax (GST) on petrol, HOBC, LDO and kerosene.
While for the HDO, the adjustment was made on the basis of 37pc GST.
The regulator has also recommended that oil prices be maintained at the current level while making adjustment in GST rates.
The final decision on price adjustment would be taken on Tuesday after taking instructions from the prime minister, the source said. The new price will be implemented from April 1.
In March 2015, the government kept prices of all petroleum products unchanged except the decision to increase GST to 37pc from 27pc on HDO.
Similarly, the government reduced the GST rate to 18pc from 27pc on four oil products to make the adjustments, which is still higher than the 17pc charged on most of other goods and services.
But the cushion with the government to absorb the price increase through tax rate reduction is minimal in terms of four oil products, suggesting nominal increase, an official in the tax department said.
“We are waiting for the finance minister’s advice to work out adjustments in taxes,” the official said, adding the move is to bring down GST to 17pc from 18pc on four products and from 37pc on HDO to appropriate downward level.
Petroleum Minister Shahid Khaqan Abbasi at a press conference on Monday did not disclose whether the government will keep prices unchanged or not for next month.
“We have sent a summary to the finance ministry for approval,” he said, adding that a final decision would be taken by the government.
The government had increased GST rate on oil prices first to 22pc and then to 27pc to prevent a decline in tax revenue because of decline in oil prices.
Published in Dawn, March 31st, 2015