ISLAMABAD: After many months, the prices of petroleum products in the country would show some signs of stability with mixed trend as the regulator seeks minor cut in petrol rates and increase in diesel rates for July.

The Oil and Gas Regulatory Authority (Ogra) has recommended about 77 paisa per litre reduction in the price of petrol (motor spirit) and Rs2.94 per litre cut in kerosene price. Furthermore, it has proposed Rs2.30 per litre and 26 paisa per litre increase in the rates of high speed diesel (HSD) and light diesel oil (LDO), respectively.

The prices would have been much lower in line with decline in international price that went down from $72 per barrel in later April to $64 per barrel by June 28 but currency depreciation partially offset the positive impact.

Based on import parity price of Pakistan State Oil (PSO) for purchases in June, the Ogra has worked out the ex-depot rate of HSD at Rs129.12 per litre instead of Rs126.82. Likewise, it calculated ex-depot price of light diesel oil to go up to Rs88.88 per litre instead of Rs88.62.

Ogra has worked out ex-depot petrol price at Rs111.91 per litre instead of Rs112.68 at present, showing a reduction of 77 paisa per litre. Also, the ex-depot price of kerosene oil has been calculated at Rs95.52 per litre, down Rs2.94 per litre from current rate of Rs98.46 per litre.

The government is currently charging 13 per cent general sales tax on petrol and HSD and 17pc on kerosene and LDO. Besides the GST, the government has also been charging petroleum levy ranging between Rs14-18 on petrol and HSD and Rs3-6 per litre on kerosene and LDO.

Over the last two months, the government has started increasing petroleum levy rates to partially recoup a major revenue shortfall faced by the Federal Board of Revenue. Petroleum remains in the federal kitty unlike GST that goes to the divisible pool taxes and thus about 57pc cent share is grabbed by the provinces.

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

Total HSD sales are touching 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.

Petroleum prices have generally been on the rise since early 2017 except a couple of reductions. The government is also set to increase electricity and gas rates by 12pc and 25pc respectively over the next couple of days.

Published in Dawn, June 29th, 2019