Govt decides to keep petrol prices unchanged

ISLAMABAD: On the Prime Minister Nawaz Sharif’s special directives, the government on Tuesday kept petroleum prices unchanged for the second consecutive month though the Oil and Gas Regulatory Authority (Ogra) had asked to increase prices in the wake of increased price of the crude oil in international market.

Ogra had recommended earlier to the government to increase prices of various categories of petroleum products up to 9.2 percent for the month of June 2016, but as the federal budget 2016/17 is round the corner, the government cannot afford to increase its prices as various taxes are going to be imposed on the sector that will automatically jack up its prices, a senior official told The News.

According to the summary sent by the authority to the Petroleum and Finance Ministries, 1.32 or Rs0.85 per litre increase in the price of petrol was proposed. Besides, an increase of 9.22 percent or Rs6.69 per litre in the price of high speed diesel, 9.17 percent or Rs3.77 per litre in kerosene and 2.99 percent or Rs2.18 per litre in high octane blended oil (HOBC) was suggested.

As the prices will remain unchanged from June 1, 2016, the price will be Rs64.27/liter for petrol, diesel Rs72.31/liter, kerosene Rs43.45/liter, high octane will be at Rs72.68 per litre. Earlier, the government had rejected the OGRA proposal of increasing prices for the month of May 2016.

Prime Minister Nawaz Sharif had announced his decision at a public rally saying, “We will have to face a deficit of Rs 18 billion but would not raise prices.” Following prime minister’s announcement of not increasing the prices of petroleum products, the government had cut general sales tax (GST) on different POL products.

The GST on petrol was cut from Rs14.48 to Rs12.89 per litre for May 2016. GST on HOBC was reduced to Rs13.90 from the previous Rs18.57 per litre, on light diesel to Rs4.72 from Rs9.63 per litre while no change was made in the GST on high speed diesel and it remained at Rs29.57 per litre. General Sales Tax on Kerosene oil was reduced to Rs4.76 from Rs10.40 per litre.

Meanwhile, a news statement issued by the Ministry of Finance sated, “In line with Prime Minister Nawaz Sharif's policy of providing maximum relief to the people, it has been decided that the prices of petroleum products will not be increased on 1st June, 2016.”

The government will absorb the full impact of maintaining the prices at the current level. It said that the absorption of Rs6.69 per litre in HSD by the Federal Government would also help the provincial governments to ensure that there is no unnecessary price hike during Ramazan on this account.