ISLAMABAD, Aug 19: The government is considering investigating a ‘pricing scam’ that has kept retail petrol rates higher by about Rs11 a litre than the correct price, calculated according to a formula that has not been changed since 2002.

Informed sources said a group of parliamentarians belonging to the ruling coalition had urged the government to hold an inquiry into the erroneous formula and fix responsibility.

The sources said the parliamentarians had told the government that at last week’s rates, the consumers had paid more than Rs12 billion extra in a year on account of petrol prices. The government had decided last week to change the petrol pricing formula and cut the ex-refinery price of the product by Rs11.11 per litre.

Under the new formula, the prices of motor spirit and HOBC are computed on the basis of prices published in Platt’s Oilgram for Arab Gulf market by the unitary method.

Earlier the motor spirit price was calculated on the basis of a ‘basket’ of naphtha and petrol after adding $60 a ton to naphtha price.

The coalition government was persuaded by some economists that substantial saving on petrol prices could be achieved by changing the pricing formula.

They had argued that since the naphtha prices were published by the Platt’s oilgram, there was no justification for continuing to determine the prices according to the old formula that should have been replaced in June 2002.

The correction in the formula, made effective from August 16, reduced ex-refinery price of petrol from Rs61.38 per litre to Rs50.27.

Similarly, it led to a reduction in the price of HOBC, from Rs62.69 to Rs55.81 a litre.

The lawmakers argued that it should be ascertained why the formula was not corrected over the past six years and who had been the beneficiaries of the lacuna.

They also asked the government to see why the National Accountability Bureau (NAB) was not allowed to interview people involved in the oil pricing mechanism despite the June 13, 2006, letter of the then Nab chairman seeking permission to question all the players.

The chairman of National Accountability Bureau had informed the government that a fraud of about Rs81 billion had been detected in the pricing mechanism until January 2006, and hence the scope of the probe should be enlarged.

The lawmakers have advised the government to reduce petrol prices by at least Rs5 per litre that would send a positive signal to the public and it would have only a negligible revenue impact of about Rs150 million per month.

Interestingly, the government has empowered the Oil and Gas Regulatory Authority (Ogra) to determine the prices of products like kerosene, light diesel oil, jet fuel and petrol that together form less than 25 per cent of the total oil consumption.

However, major products like high-speed diesel and furnace oil pricing are outside the regulator’s ambit.

Of the 18 million tons of fuel oils consumed in the country, high-speed diesel accounts for about nine million tons, followed by about 5.5 million tons of furnace oil, leaving behind less than four million tons of other products, including petrol, jet fuel and kerosene.