ISLAMABAD: After almost eight months of price hike, the Oil and Gas Regulatory Authority (Ogra) on Friday recommended a Re1 per litre cut in the prices of high speed diesel (HSD) and petrol from May 1.

On the other hand, the regulator proposed Rs15 and Rs10 per litre increase in the prices of kerosene and light diesel oil (LDO), respectively.

In a summary sent to the government, Ogra said the adjustment in diesel and petrol prices was required to pass on the impact of drop in the international benchmark crude oil prices during April which declined from $56 per barrel to around $50.

Calculates a meagre Re1 cut in petrol, diesel for May

On the basis of existing tax rates and imported cost, Ogra calculated the new ex-depot price of HSD at Rs82 from Rs83 per litre for May. Likewise, it worked out the ex-depot price of petrol at Rs73 per litre from Rs74.

In contrast, Ogra recommended new ex-depot price of kerosene at Rs59 from Rs44 per litre, an increase of Rs15. Also, it proposed a Rs10 per litre rise in the price of LDO to Rs54 instead of Rs44.

Ogra had calculated the prices on a basis of imports made by Pakistan State Oil (PSO) in April and notified GST and petroleum levy rates on all products.

Finance Minister Ishaq Dar is expected to announce a formal government decision after consulting the prime minister on April 30.

An official said the government was likely to keep the prices unchanged on the grounds of price stability and earn a few billions of revenue direly needed at the fag-end of the fiscal year to minimise fiscal deficit.

The Ministry of Petroleum and Ogra have been recommending for many months a substantial increase in the prices of kerosene and LDO to minimise a huge price differential with petrol.

The price differential of about Rs29 per litre between petrol and the two other products was encouraging dishonest market operators to mix kerosene with petrol for higher profits and resulting in adulterated and poor quality petrol in the market instead of higher grade (92RON) being charged to consumers. The government has been rejecting these calls saying it wanted to protect poor people.

Interestingly, kerosene is the only regulated petroleum product but unavailable at fixed rates anywhere in the country while all other products are deregulated and are available reasonably within the price band announced by the government.

The petrol and HSD are two major products that generate most of revenue for the government because of their massive and yet growing consumption.

For example, HSD sales across the country are now going beyond 800,000 tonnes per month against monthly consumption of around 700,000 tonnes of petrol. The sales of kerosene and LDO are generally less than 10,000 tonnes per month.

Published in Dawn, April 29th, 2017