ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) on Friday recommended a Rs5.07 and Rs3.67 per litre cut in the prices of high-speed diesel (HSD) and petrol, respectively, for August.

On the other hand, the regulator proposed an increase of Rs13 and Rs10 per litre in the prices of kerosene and light diesel oil.

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 market during July.

Therefore, on the basis of existing tax rates and imported cost of Pakistan State Oil (PSO), Ogra calculated the ex-depot price of HSD and petrol at Rs74.83 and Rs67.63 per litre for August against the current rate of Rs79.90 and Rs71.30.

In contrast, it proposed to fix ex-depot prices of kerosene and LDO at Rs57 and Rs54 litre against the existing Rs44.

An official said the regulator had calculated the prices on the basis of imports made by PSO in July and notified GST and petroleum levy rates on all products.

He said the summary has been forwarded to the Ministry of Petroleum which is usually sent to the Ministry of Finance for a decision. Under the practice in vogue, the oil prices are revised on the last day of every month.

The official said the government has been passing on partial reduction recommended by Ogra over the past few months, but is expected to implement its price cut proposals for August fully in view of political challenges.

Ogra and petroleum ministry 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 petroleum ministry believed that a Rs30 per litre price differential between petrol and the two other products was encouraging dishonest market operators to mix kerosene oil 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, July 29th, 2017