Ogra’s miscalculation to mire next fuel price review

KARACHI: Oil & Gas Regulatory Authority (Ogra) didn’t incorporate the full exchange rate loss of Pakistan State Oil (PSO) in the latest fortnightly revision of the petroleum prices and the carryover exchange rate loss may create problems in the next

review, The News learnt on Tuesday.

Ogra didn’t follow the directives of the Economic Coordination Committee (ECC) to fully adjust the exchange rate losses of PSO under the influence of the government, which wanted to avoid the public backlash, the sources in the oil industry told The News.

A source said that Ogra was not acting as a regulator but more of a pawn of the government, which didn’t want to raise the price substantially.

The first mistake was made in the previous fortnightly revision when the exchange rate was not fully included in the price, the industry official added.

“If it were done by raising the prices as per the exchange rate, the prices would definitely have gone up but the government would have the leverage to reduce them in the latest fortnightly revision,” sources revealed.

An official said that the exchange rate loss of PSO was calculated at Rs31/litre on petrol and Rs16/litre on diesel; however, it was not fully adjusted.

It is still Rs23 for petrol and Rs13 for diesel and has been carried forward to the upcoming revision by the end of this month.

If global oil prices didn’t come down further and exchange rate didn’t see major decline, the carryover exchange rate loss may deprive the consumers of any reduction in the prices of petroleum products, sources believed.

Interestingly Ogra calculated the new price from July 28 to August 15, which is not done normally, as the average price for the first fortnight of the month is calculated till 11th or 12th of a month, according to officials.

PSO’s official correspondence with Ogra also reveals the story as how the price was calculated by Ogra as PSO pointed out that detailed price computations were forwarded to Ogra as per the approved mechanism; however, Ogra asked the PSO to revise the calculation by staggering the recovery of exchange losses.

The price of diesel and petrol was jacked up by the government in the latest revision. The price of petrol jumped by Rs6.72/litre to Rs233.91/litre from Rs227.19/litre. Diesel price was slightly down by 0.51 paisas to Rs244.44/litre from Rs244.9/litre.