ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has recommended in a summary sent to the government that prices of petroleum products should be increased by up to 3.2% for January 2020.
It recommended the highest increase of Rs3.10 per litre or 3.2% in the price of kerosene oil – a fuel used for cooking purposes – followed by a hike of Rs2.61 per litre or 2.3% in the price of petrol, which is a transportation fuel that has an impact on the common man.
According to an official, Ogra has sent the summary to the Ministry of Energy (Petroleum Division), which will forward it to the finance ministry for approval. The government will take decision on the summary on Tuesday.
The regulator suggested an increase of Rs2.25 per litre or 1.8% in the price of high-speed diesel, which is mainly used in transport and agriculture sectors. Any revision in the diesel price has a direct impact on the life of common man as it results in a rise in inflation.
Ogra also proposed an increase of Rs2.08 per litre or 2.5% in the price of light diesel oil (LDO) for the month of January.
If the government accepts recommendations of the regulator, the petrol price will go up from the existing Rs113.99 to Rs116.6 per litre and diesel price will rise from the current Rs125.01 to Rs127.26 per litre.
The price of LDO, which is mainly used in industries, will jump to Rs84.51 per litre from Rs82.43 whereas kerosene oil price will rise from the current Rs96.35 to Rs99.45 per litre.
Kerosene is used for cooking purposes, especially in remote areas where liquefied petroleum gas (LPG) and pipeline gas are not available.
The government is currently charging 17% general sales tax (GST) on all petroleum products. Apart from that, petroleum levy is being collected on these products from the consumers.
The government is charging a petroleum levy of Rs18 per litre on diesel, Rs15 per litre on petrol, Rs6 per litre on kerosene and Rs3 per litre on LDO.
In the tenure of previous Pakistan Muslim League-Nawaz (PML-N) government, the petroleum levy was charged in the range of Rs3 to Rs10 a litre but GST was higher than the current rate.
Since GST collection is transferred to provinces, keeping in view its high revenue requirement, the federal government has reduced the GST rate while increasing the petroleum levy to collect and transfer more revenue to the national exchequer.
In the current government’s tenure of around one and a half year, the prices have touched high levels due to depreciation of the rupee against the US dollar.
Pakistan is a net importer of petroleum products and almost 85% of the need is imported, therefore, the depreciation of the rupee against the dollar has played a key role in pushing up oil prices, resulting in higher inflation.
Prices of petroleum products had dropped in December when the government slashed them by up to 3.4%.
Now, the regulator has recommended an increase in prices of all petroleum products for January 2020 and the finance ministry may insist on passing the full impact on to consumers in order to avoid revenue loss. However, final decision will be taken in consultation with Prime Minister Imran Khan.