Regulator proposes hike in fuel prices

Published December 31, 2019
Any further increase in petroleum prices is unlikely to sit well with consumers who are already facing record-high inflation.
Any further increase in petroleum prices is unlikely to sit well with consumers who are already facing record-high inflation.

ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has worked out minor adjustments in the costs of various imported petroleum products in the range of 1.8 per cent to a maximum 3.2pc for January 2020.

The Finance Division will make the final decision on Tuesday whether to keep the petroleum products prices unchanged largely as a good gesture of the New Year or pass on the raise to end consumers.

The Ogra has worked an increase of Rs2.61 or 2.3pc in the per litre petrol price. In case, government approves the increase, consumer price of petrol will go up to Rs116.6 per litre from the existing Rs113.99 per litre.

Most of the vehicles especially passengers are consuming petrol as fuel. Therefore, increase in the price will lead to increase in the transport fares across the country. The consumption of petrol as fuel also increased following massive shortfall in CNG availability.

Moreover, Ogra recommends an increase of Rs2.25 or 1.8pc per litre prices of high-speed diesel (HSD), which is mainly used in transport and agriculture sectors. With the maximum increase, the HSD price will go to Rs127.26 per litre from the current Rs125.01 per litre.

The increase will lead to increase in the higher input cost of agriculture products as well as increase in fares of goods transports. The government is already providing subsidy on lower tariff to Tube wells used for agriculture purposes in Baluchistan.

The regulator proposed highest increase of Rs3.10 or 3.2pc in the price of kerosene oil for the month of January 2020. The kerosene oil consumption increases in the winter seasons as alternate fuel for cooking purposes at homes especially in remote areas where liquefied petroleum gas (LPG) and pipeline gas are not available.

The kerosene oil price will jack up to Rs99.45 per litre from the existing Rs96.35 per litre in case the government passes on the full increase to end consumers.

Ogra has recommended an increase of Rs2.08 or 2.5pc in the price of light diesel oil (LDO) for the month of January. In the wake of increase approved, the price of LDO will go up to Rs84.51 per litre from the existing Rs82.43 per litre. The LDO is used mainly in industries.

The Federal Bureau of Revenue is collecting 17pc general sales tax (GST) on all petroleum products. Besides, the federal government is collecting petroleum levy of Rs18 per litre on diesel, Rs15 per litre on petrol, Rs6 per litre on kerosene and Rs3 per litre on LDO.

Pakistan is net importer of petroleum products and meets 85pc of total demand through imports. Therefore, depreciation of the local currency is one of the contributors to higher fuel in prices in the country.

Published in Dawn, December 31st, 2019

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