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Thursday October 06, 2022

Miftah Ismail under fire: How are petrol prices fixed in Pakistan?

Finance minister gives brief explanation on how petrol and diesel prices are set in Pakistan

By Web Desk
August 16, 2022
Finance Minister Miftah Ismail.
Finance Minister Miftah Ismail. 

ISLAMABAD: Finance Minister Miftah Ismail Tuesday explained how the petrol prices are calculated after he came under fire following an increase in petrol price.

The government revised the prices of petroleum products for the next fortnight, triggering a strong reaction from the masses including PML-N vice president Maryam Nawaz who rejected the government’s decision.

Responding to senior journalist Hamid Mir on Twitter, Finance Minister Miftah Ismail said the government has not imposed any tax on petroleum products.

The Finance Division, in a statement said, “In the wake of fluctuation in petroleum prices in the international market and exchange rate variation, the government has decided to revise the existing prices of petroleum products to pass on the impact to the consumers.”

After the increase, the ex-depot price of petrol will be Rs233.91 per litre, and light diesel oil (LDO) Rs191.75/litre, high-speed diesel price would be Rs244.44 per litre and kerosene Rs199.40/litre.

What’s the petrol price calculation formula?

Miftah Ismail explained that the Oil and Gas Regulatory Authority (OGRA) takes the average of Platt prices, adds freight and premium paid by PSO on top of these prices, and multiplies that by the exchange rate.

In addition, he added, it also “trues up” the previous fortnight’s cost by taking into account the rupees paid by PSO at the actual exchange rate as opposed to the average used to estimate the previous fortnight’s cost.

The minister said that the government has not added any new tax or levy to the price.

“The price of petrol has gone up (and diesel has gone down) because the cost paid by PSO in the previous fortnight was more than the cost estimated by OGRA and also because the premium paid by PSO on petrol increased and premium paid on diesel remained unchanged.”

‘Easy target’

Clarifying his position, the minister said that he did not say that the price will not be increased.

“Mir sahib I said I will not add one penny of new taxes or levies to the price. And I have not. But you know Hamid sahib that the fuel price summary is moved by OGRA and sent to Finance division through the Petroleum division. We get it only a few hours before prices are set.”

Miftah Ismail said, “I am an easy target. Which is fine. But this price change only reflects the change in PSO costs and doesn’t have any new taxes.”

He further added that people are welcomed to critique or criticise him.

“I know I am sincere to my country and have saved it from default & working to the best of my ability.”