ISLAMABAD, Dec 15: The government on Monday ignored a proposal by the Oil and Gas Regulatory Authority (Ogra) to reduce prices of diesel and petrol by Rs4 per litre and kept the prices of petroleum products unchanged for the next fortnight.

However, oil refineries have reduced the price of furnace oil by Rs354 per ton.

One ton of the oil, which is used for power generation, will now sell for Rs19,700.

Sources said the decision not to reduce prices would enable the government to earn over Rs7 billion over the next 15 days through the petroleum development levy (PDL).

They said the government wanted to raise funds to pay Rs25 billion dues to oil marketing companies under the price differential claims (PDC), or subsidy. The outstanding amount dates back to July when crude oil prices in the international market had touched $147.

At present the government does not subsidise petroleum products.

Market sources said the compressed natural gas (CNG) sector had warned the government of severe repercussions if petrol price was brought at par with CNG. It had said use of the gas would decline drastically and many petrol pumps would close down if the gap in prices was reduced.

At the start of the current month, the government had reduced prices of petrol and high octane blending component (HOBC) by Rs9 a litre, kerosene and light diesel oil (LDO) by Rs5 and high speed diesel by Rs4.

The prices of diesel (Rs57.14) and petrol (Rs57.66) are almost equal.

According to a notification, the government has increased the ratio of tax (PDL) on petroleum products and will earn Rs29.49 on the sale of each litre of petrol in the next fortnight. It will earn Rs39.85 per litre of HOBC, Rs12.48 on kerosene and Rs12.40 on LDO.