ISLAMABAD: The caretaker government is in a quandary over the question of increasing petroleum prices by Rs3-4 per litre, calculated by the Oil & Gas Regulatory Authority (Ogra), for the next month due to higher international market and currency devaluation.

Based on a controversial pricing formula, the Ogra has worked out an increase of about Rs3.50 per litre in the prices of petrol, Rs2.45 per litre in high speed diesel (HSD) and about Rs4 per litre in kerosene oil for August.

However, the caretakers are still undecided over the price increase because of challenges in the Supreme Court of Pakistan and want to defer the decision till formation of the new government over the next few days. There is a strong likelihood that the caretakers may keep the prices unchanged, a senior government official told Dawn.

He said the caretaker government had increased on June 30 the prices of petrol and diesel by Rs7.54 per litre and Rs14 per litre, respectively while kerosene by Rs3.50 but had to face the brunt of an angry bench of the Supreme Court of Pakistan.

As a consequence, the government was compelled to reduce petrol and HSD rates by Rs4.26 and Rs6.37 per litre, respectively. Likewise, the kerosene and light diesel oil rates were also reduced by about Rs4 and Rs5 per litre, respectively.

The official said the incoming government had conveyed to the caretakers not to defer this tough political decision for them.

On the other hand, the Petroleum Division and Ogra were under pressure from some members of the Senate Standing Committee on Petroleum that proposed changes in the prices of petroleum products should not be made public before a government decision, the official said.

He said it was strange that senate committee members were denying the benefit of changing prices to consumers and to some extent retailers because the oil companies were well aware of any change in the upcoming price adjustment and were able to earn inventory gains. He, however, said because of the pressure, the two institutions had given undertaking to the senate committee that they would not disclose prices until a final decision by the government.

The apex court is ceased with a case on the taxation on petroleum products. The officials of the Ogra, Petroleum Division and some oil companies had a consultative session on Monday. It was agreed that Rs2.45 per litre increase be proposed for HSD including about Rs1 per litre taxes and Rs3.50 for petrol including tax at about 60 paisa per litre, with caretakers to decide the taxation amount.

It was agreed that a summary for the next month oil prices be kept a routine affair and not to be shared with the media. The sources said the caretaker government was, however, unlikely to pass on the full impact worked out by the regulator and the Petroleum Division.

Currently, the government is charging 12pc GST on petrol and kerosene, 24pc on HSD and 9pc on light diesel oil (LDO). In addition, the government is also charging Rs8 per litre petroleum levy on HSD, Rs10 per litre on petrol and Rs6 and Rs3 per litre on kerosene and LDO, respectively.

The petrol and HSD are two major products that generate most of the revenue for government because of their massive and yet growing consumption in the country. 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, July 31st, 2018