ISLAMABAD: Based on existing tax rates, Oil and Gas Regulatory Authority (Ogra) has calculated about two per cent increase in diesel prices and a negligible reduction in petrol rate for the month of February.

A government official told Dawn that Ogra on Thursday moved a summary to the government containing calculations for petroleum prices on the basis of existing rates of general sales tax (GST) and petroleum levy. He said the Ministry of Finance would announce the ex-depot prices of petroleum products on Jan 31.

Based on import parity price of Pakistan State Oil for purchase in January, Ogra has worked out about Rs2.47 per litre increase in the price of high speed diesel (HSD) and Rs1.10 per litre in light diesel oil (LDO). On the other hand, the regulator has calculated six paisa and 66 paisa per litre reduction in the prices of petrol and kerosene oil respectively.

As such, the ex-depot rate of HSD has been calculated at Rs129.73 per litre instead of Rs127.26, showing an increase of 1.9pc. Likewise, the ex-depot price of LDO has been worked out at Rs85.61 per litre instead of existing rate of Rs84.51, showing an increase of 1.3pc.

On the other side, the ex-depot petrol price has been proposed to go down to Rs116.54 per litre from existing rate of Rs116.60, down 0.1pc. The ex-depot price of kerosene has been proposed to be reduced by 0.7pc to Rs98.79 per litre from existing rate of Rs99.45 per litre.

The government has already increased GST on all petroleum products to standard rate of 17pc across the board to generate additional revenues. Until January last year, the government was charging 0.5pc GST on LDO, 2pc on kerosene, 8pc on petrol and 13pc on HSD.

Besides the 17pc GST, the government has more than doubled the rate of petroleum levy on HSD in recent months to Rs18 per litre instead of Rs8, while levy on petrol had also been increased by 50pc to Rs15 per litre instead of Rs10. The petroleum levy on kerosene oil and LDO remains unchanged at Rs6 and Rs3 per litre respectively.

Over the last few months, the government has increased 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 GST that goes to the divisible pool taxes and thus about 57pc cent share is grabbed by the provinces.

The petrol and HSD are two major products that generate most revenue for the government because of their massive and yet growing consumption in the country. Total HSD sales are touching 700,000 tonnes per month against monthly consumption of around 600,000 tonnes of petrol. The sales of kerosene oil and LDO are generally less than 10,000 tonnes per month.

The oil imports have plunged by about 20pc and local production has dropped by about 13pc over first half of the current fiscal year over the previous year due to higher prices, slower economic activities and other reasons.

Published in Dawn, January 31st, 2020