ISLAMABAD, Oct 27: The ministry of petroleum has proposed a reduction of Rs5 per litre in prices of diesel and petrol for next month.

The proposal was made in a communication to the finance ministry in the run-up to the fortnightly review of prices, due at the end of the month, sources told Dawn.

The proposal was based on calculations done by the Oil and Gas Regulatory Authority (Ogra), the sources said, adding that the government was earning Rs11 billion a fortnight through the petroleum development levy (PDL).

The government has kept prices of diesel and petrol unchanged since Sept 15 despite a steep decline in international crude oil prices.

The official said that even if the government approved the proposal, it would still earn more than Rs6 billion a fortnight.

An official told Dawn that the government was now earning Rs12.95 per litre from tax (PDL) on diesel and Rs30.53 a litre on petrol.

This does not include the general sales tax (GST) of 16 per cent which is being collected by the Federal Bureau of Revenue (FBR).

At present, petrol is being sold at Rs81.66 per litre and diesel at Rs68.68 in retail.

The sources cited latest Ogra calculations to contend that the government was also earning a PDL of Rs1.5 per litre on kerosene.

They said the government owed nothing to oil marketing companies on account of price differential claim because it was not providing any subsidy on petroleum products anymore.

According to Ogra calculations, the sources said, oil marketing companies and dealers were now pocketing extra money in commissions. The government had capped commissions on the crude oil price at $100 a barrel. But it is still paying at old rates – four per cent commission to dealers and 3.5 per cent to oil marketing companies.

The ministry of petroleum has also proposed a cut in commissions in keeping with prices in the international market.

The marketing companies are getting a margin of Rs1.7 a litre on petrol and Rs1.22 on diesel, while dealers are pocketing Rs1.36 per litre on diesel and Rs1.95 on petrol.