ISLAMABAD: The government on Thursday increased the prices of all petroleum products by up to 8.25 per cent effective for December, after putting on hold deregulation of diesel prices.

The increase was approved by Prime Minister Shahid Khaqan Abbasi who also cleared higher tax rates on kerosene and light diesel oil.

Under the decision, the ex-depot price of high speed diesel (HSD) was increased by Rs1.36 per litre and that of petrol by Rs1.48.

Likewise, the price of kerosene oil was also jacked up by Rs4.39/litre and LDO by Rs3.12/litre.

As such, the price of Kerosene increased by about 8.25pc. LDO price went up by Rs6.36pc. The prices of major products — HSD and petrol — increased by 1.60pc and 1.94pc respectively.

Therefore, the new ex-depot price of HSD was set at Rs85.95/litre for December instead of Rs84.59. Likewise, the ex-depot price of petrol was increased to Rs77.47/litre instead of existing rate of Rs75.99.

Also, the new ex-depot price of kerosene at Rs57.58/litre was jacked up from Rs53.19, showing an increase of Rs4.39 or about 8.25pc.

Also, the rate for LDO was increased by Rs3.12 to Rs52.12 per liter instead of previous rate of Rs49. Under the practice in vogue, the oil prices are revised on the last day of every month.

An official said even though the Oil and Gas Regulatory Authority (Ogra) had worked out a Rs1.20/litre increase in the price of HSD, the government passed on a higher raise in its rate after allowing higher margins to oil companies and dealers by putting on hold its own decision of Oct 6.

He said the petroleum division had issued a fresh order on Wednesday barring oil companies from going ahead with deregulation of HSD prices at least for a month. He said the deregulation decision would be implemented next month.

The erstwhile Ministry of Petroleum under the minister-ship of Shahid Khaqan Abbasi and the Ogra have been recommending for almost two years a substantial increase in prices of kerosene oil and LDO to minimise a huge price differential with petrol.

The ministry believed that a Rs30 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 (92-RON) being charged to consumers.

PM Abbasi has been allowing gradual increase in the price of LDO and Kerosene that former PM Nawaz Sharif kept unchanged at Rs44/litre for almost four years ‘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 the government’s revenue because of their massive and yet growing consumption in the country.

The current GST rate for HSD is fixed at 31pc and 17pc on all other products.

In addition, the government is also charging petroleum levy at the rate of Rs8 on HSD, Rs10 on petrol, Rs6 on kerosene and Rs3/litre on LDO.

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 oil and LDO are generally less than 10,000 tonnes per month.

Published in Dawn, December 1st, 2017