ISLAMABAD: The government on Monday decided to keep the prices of all major petroleum products unchanged for the next 15 days.

An informed source said the Oil and Gas Regulatory Authority (Ogra) had recommended a Rs2.68 per litre increase in the ex-depot price of petrol and 65 paisa per litre reduction in the ex-depot price of high speed diesel (HSD) based on the existing tax rates, exchange rate loss and import parity price.

However, general sales tax (GST) on HSD was increased by 65 paisa per litre and brought down to zero on petrol to maintain the existing prices. The inland freight equalisation margin — the transportation cost required to keep product prices uniform across the country — has declined by about 62 paisa per litre.

Therefore, under a notification, the ex-depot price of petrol was kept unchanged at Rs145.82 per litre. The product is mostly used in private transport, small vehicles, rickshaws and two-wheelers and has a direct bearing on the budget of middle- and lower-middle classes.

The ex-depot price of HSD was also maintained at the existing level of Rs142.62 per litre. Its price is considered highly inflationary as it is mostly used in heavy transport vehicles, trains and agricultural engines such as trucks, buses, tractors, tubewells and threshers.

The ex-depot prices of kerosene and light diesel oil (LDO) were also kept unchanged at Rs116.53 and Rs114.07 per litre, respectively.

Kerosene is mostly used by unscrupulous elements for mixing it with petrol and, to some extent, for lighting purposes in very remote areas, while LDO is consumed by flour mills and a couple of power plants.

On November 4, the government had increased the prices of petrol and HSD by Rs8.03 and Rs8.14 per litre, respectively. Similarly, the prices of kerosene and light diesel oil were increased by Rs6.27 and Rs5.72 per litre, respectively. For the first time in the country’s history, prices of all petroleum products are above Rs110 per litre.

Petrol and HSD are two major products that generate most of the revenue for the government because of their massive, yet growing consumption. Average petrol sales are touching 750,000 tonnes per month against the monthly consumption of around 800,000 tonnes of HSD. Sales of kerosene and LDO are generally less than 11,000 tonnes and 2,000 tonnes a month.

Under a new mechanism, oil prices are revised by the government on a fortnightly basis to pass on international prices published in Platt’s Oilgram instead of the previous mechanism of monthly calculations on the basis of import cost of Pakistan State Oil.

Published in Dawn, November 16th, 2021