ISLAMABAD: For the first time during its tenure, the PPP-led government passed on the full impact of up to 10.47 per cent reduction in international petroleum prices to consumers with immediate effect and also took credit for it although it continues to charge petroleum levy and general sales tax at the maximum limit allowed in the finance bill.

Information Minister Qamar Zaman Kaira and Petroleum Minister Dr Asim Hussain addressed a news conference to announce the reduction in petroleum prices for the next 15 days, along with a 5.5 per cent cut in CNG prices to maintain its 60 per cent parity with petrol.

At the same time, Mr Kaira asked provincial governments and the departments concerned to take steps to adjust accordingly the fares of public transport and cost of transportation of goods so that the positive effect of its ‘substantial reduction’ reached the people.

Mr Kaira said that with effect from Friday midnight, the price of petrol had been reduced to Rs89.51 per litre from existing Rs99.97.

The price of High Octane Blending Component has been reduced by 9.4 per cent to Rs113.32 per litre; that of kerosene oil was reduced by Rs5.26 per litre to Rs88.79 from Rs94.05 per litre; high-speed diesel cut by Rs6.08 per litre to Rs99.69 and light diesel price decreased by Rs5.02 per litre to Rs86.57.

CNG price

Mr Kaira said the government had also reduced the price of CNG by Rs4.82 per kg to Rs81.95 for Zone-1 (Punjab, KPK and Potohar region) and Rs4.37 per kg to Rs74.83 for Zone-II (Balochistan and Sindh). Currently, the CNG prices in Zone-I and II stand at Rs86.77 and Rs79.20 per kg, respectively.

The Oil and Gas Regulatory Authority (Ogra) whose recommendations for the price reduction has been fully implemented for the first time, separately notified a reduction of 10 per cent or Rs8.70 per litre in the price of JP-1, followed by 8.7 per cent or Rs6.63 per litre in the price of JP-4 and 6.3 per cent or Rs5.25 per litre in the price of JP-8.

The reduced prices of JP-I, JP-4 and JP-8 will now stand at Rs78.43 per litre, Rs69.70 per litre and Rs78.11 per litre, respectively. These fuels are used in different kinds of planes.

The two ministers faced a volley of questions as to why the ministers never announced price adjustments with similar fanfare when the government increased the prices of petroleum products over the past four years. They said the prevailing oil pricing formula entailed a pass-through system and whatever space the government got was passed on to consumers.

Petroleum Minister Dr Asim Hussain said that revised prices would remain in place for 15 days and if the new system succeeded after a monitoring for a quarter, prices would be adjusted on a weekly basis. He said that under an understanding with CNG owners, the CNG prices would be kept at 60 per cent of petrol prices.

“The CNG will have to be phased out gradually,” he said when asked about the future of the CNG industry.

Responding to a question about his support to gas companies in securing stay orders from the Lahore High Court against determinations by Ogra which sought reduction in system losses to five per cent and about his attempt to allow seven per cent system losses to gas companies that would deny a benefit of price reduction to consumers, the minister claimed that “Ogra is transgressing its role”. He further claimed that Ogra was a regulator which should limit its role to regulation and leave policy decisions to the government.

He said the reduction in the system should be `gradual’ and on the basis of some `rationale or study’ by an independent consultant. He did not say anything when it was pointed out that loss reduction benchmarks were being gradually reduced since 2004.