ISLAMABAD: The Oil and Gas Regulatory Autho­rity (Ogra) has calculated up to 2.6 per cent reduction in prices of major petroleum products for October to pass on to the public the impact of lower prices in the international market.

However, kerosene oil price has been proposed to be set at Rs100.76 per litre instead of Rs99.57, showing an increase of 1.2pc.

A petroleum division official told Dawn that Ogra moved a summary to the government on Friday containing calculations on petroleum prices on the basis of existing rates of general sales tax and petroleum levy.

Crude prices had declined from $63per barrel at July end to $59 per barrel in the Middle East by the end of August.

Based on the import parity price of the Pakistan State Oil (PSO) for purchase in July, Ogra worked out about Rs3.23 per litre decrease in the price of high-speed diesel, Rs2.55 per litre in petrol and Rs2.41 per litre for the price of light diesel oil. The regulator also worked out an increase of Rs1.19 per litre of kerosene oil.

As such, the ex-depot rate of high-speed diesel (HSD) has been calculated at Rs123.91 instead of Rs127.14 per litre, showing a reduction of 2.5pc. Likewise, the ex-depot petrol price has been proposed to drop to Rs110.69 from the existing rate of Rs113.24 per litre.

The ex-depot price of light diesel oil has been worked out at Rs89.48 per litre instead of existing rate of Rs91.89 per litre, showing a decrease of 2.6pc.

The government had earlier increased General Sales Tax (GST) on all petroleum products to 17pc across the board to generate additional revenues. Until January this year, the government had been charging 0.5pc GST on LDO, 2pc on kerosene, 8pc on petrol and 13pc on HSD.

Besides the 17pc GST, the government had more than doubled the rate of petroleum levy on HSD in recent months to Rs18 per litre instead of Rs8 per litre, while levy on petrol had also been increased by 50pc to Rs15per litre instead of Rs10 per litre. The petroleum levy on kerosene oil and LDO remained unchanged at Rs6 and Rs3 per litre, respectively.

For the past few months, the government had been increasing petroleum levy rates to partially recoup a major revenue shortfall faced by the Federal Board of Revenue. The levy remains in the federal kitty unlike the GST that goes to the divisible pool taxes whose 57pc share is given to the provinces.

The petrol and HSD are two major products that generate most of revenue for the government because of their massive and yet growing consumption in the country. The monthly sales of HSD are touching 800,000 tonnes against the monthly consumption of around 700,000 tonnes of petrol. The sales of kerosene oil and LDO are generally less than 10,000 tonnes a month.

Published in Dawn, September 28th, 2019