ISLAMABAD: Days after the exit of the PTI government, the Oil and Gas Regulatory Authority (Ogra) on Thursday suggested an unprecedented increase of up to Rs120 per litre (over 83 per cent) in the prices of petroleum products with effect from April 16 to recover full imported cost, exchange rate loss and maximum tax rates.
Highly placed sources in Ogra and the Petroleum Division confirmed that the regulator had presented two options to the government for price increase — the highest-ever in both cases — on the next fortnightly review due on Friday (today).
Prime Minister Shehbaz Sharif must decide whether or not to lift a four-month price freeze (until June 30) announced by his predecessor, Imran Khan, on February 28.
Informed sources, however, told Dawn that the price freeze would continue for the time being.
Shehbaz may continue the freeze announced by his predecessor
Ogra said both options had been worked out under the PTI government’s August 24, 2020, policy guideline. This required calculations on the basis of existing sales tax and petroleum levy rates at the time of fortnightly review as well as full tax rates permissible under the law.
The Ogra’s working paper, seen by Dawn, suggests that based on the existing tax rates — which are zero — the prices of all products should go up in a Rs22-52 per litre band to charge breakeven prices without any element of subsidy.
Under this option, the ex-depot price of high speed diesel (HSD) has been worked out at Rs195.67 per litre against the existing rate of Rs144.15, showing an increase of Rs51.52, or 35.7pc. The ex-depot price for petrol will rise by Rs21.60 (14.2pc) to Rs171.46 per litre from Rs149.86.
The same formula suggests the kerosene price at Rs161.61 per litre against Rs125.56 at present, up Rs36.03 or 28.7pc. The ex-depot price of light diesel oil (LDO) has been calculated at Rs157.20 per litre against Rs118.31 at present, showing an increase of Rs38.89, or 32.9pc.
The second price scenario is based on full tax rates, including 17pc GST on all products, and Rs30 per litre petroleum levy each on HSD and petrol, followed by Rs12 on kerosene and Rs10 on LDO — the maximum rates permissible under the Finance Bill.
In this case, Ogra has worked out the ex-depot price of HSD at Rs264.03 per litre against Rs144.15 at present, showing an increase of Rs119.88 or 83.2pc. Likewise, the price of petrol has been calculated at Rs235.16 per litre for the next fortnight against Rs149.86 at present, up by Rs85.30 or 57.4pc.
The ex-depot price of kerosene, with full taxes, has been worked out at Rs203.42 per litre against the existing rate of Rs125.56, an increase of Rs77.86 or 61.8pc. The LDO price has been calculated at Rs195.62 per litre against Rs118.31 at present, an increase of Rs77.31 per litre or 65.34pc.
The PTI government had approved slightly over Rs31 billion for payment to oil marketing companies as price differential claims for March, but an amount of Rs34bn for the first fortnight of April has neither been approved nor allocated in the budget so far.
Published in Dawn, April 15th, 2022