ISLAMABAD: The government on Thursday increased the price of petrol by Rs2 per litre, however, the rates of other petroleum products remained unchanged for September.

According to an official statement, the new ex-depot price of petrol (92RON) has been set at Rs71.50 per litre. The prices of high-speed diesel (HSD) at Rs77.40, kerosene and light-diesel oil (LDO) at Rs44 per litre would be maintained for September.

The decision, the statement claimed, was made by Prime Minister Shahid Khaqan Abbasi after a consultation with Finance Minister Ishaq Dar.

As a result, the Federal Board of Revenue (FBR) has been directed to curtail sales tax rates. A separate notification issued by the FBR reduced the tax rate on HSD to 30 per cent for September from the existing 35.5pc, down 75 paisa per litre.

Likewise, the General Sales Tax (GST) on petrol was also reduced to 17pc from the existing 20.5pc – with an impact of 35 paisa per litre. The tax rates on kerosene and LDO were unchanged at zero.

On the basis of the prevailing prices in the international market, the Oil and Gas Regulatory Authority (Ogra) had recommended an increase of Rs2.35 in petrol and 75 paisa in HSD. It had also proposed an increase of Rs15.79 and Rs12.18 per litre in the price of kerosene and LDO. Under the current procedure, oil prices are revised on the last day of every month.

For the last several months, the Ministry of Petroleum and Ogra have been recommending a substantial increase in the prices of kerosene and LDO to minimise a huge price differential with petrol.

The ministry and the regulatory authority believe that a Rs30 per litre price differential between petrol and the two other products was encouraging dishonest market operators to mix kerosene with petrol for higher profits. This left consumers with adulterated and poor quality petrol in the market instead of higher grade (92RON). The government has been rejecting these recommendations, claiming that it wanted to protect poor people.

However, kerosene is the only regulated petroleum product which is unavailable at fixed rates anywhere in the country while all other products are not regulated – they are available easily within the price band announced by the government.

Petrol and HSD are two products that generate most of the government’s revenue due to their massive and ever-growing consumption in the country.

For example, HSD sales across the country are now beyond 800,000 tonnes per month against a monthly consumption of roughly 700,000 tonnes of petrol. The sales of kerosene oil and LDO are generally less than 10,000 tonnes per month.

Published in Dawn, September 1st, 2017