Prime Minister Shehbaz Sharif on Friday rejected the Oil and Gas Regulatory Authority's (Ogra) proposal for an unprecedented hike in the prices of petroleum products.

Speaking at an Iftar dinner for the new government's coalition partners, Shehbaz said: "As you know, the prices of petroleum products are revised every 15 days. They had [proposed] an increase of Rs21 and Rs50 per litre."

He went on to say that the people of the country would "curse" the new government if such a "mountain of inflation" was unleashed on them.

"What do the people know about what the previous government has done?" he asked, adding that the proposal for the price hike was rejected.

Radio Pakistan also reported the premier as saying that the government would bear the burden of an increase in prices instead of shifting it onto the masses.

Meanwhile, a handout issued by the Finance Division also confirmed that there would be no change in the prices of petroleum products.

"Ogra has proposed [a] significant increase in the prices of petroleum products. However, the prime minister of Pakistan has rejected the recommendations of Ogra and directed to maintain petroleum products’ prices unchanged in order to provide relief to the common man," the handout said, a copy of which is available with Dawn.com.

The price of petrol and high speed diesel will remain Rs149.86 and Rs144.15 per litre, respectively. Kerosene and light diesel oil will also continue to be sold for Rs125.56 and Rs118.31 per litre, respectively.

The previous PTI government had announced a four-month freeze (until June 30) on petrol and electricity prices on February 28 as part of a series of measures to bring relief to the public.

Ogra proposes massive oil price hike

On Thursday, Ogra had suggested an unprecedented increase of up to Rs120 per litre (over 83 per cent) in the prices of petroleum products to recover full imported cost, exchange rate loss and maximum tax rates.

Highly placed sources in Ogra and the Petroleum Division had confirmed that the regulator had presented two options to the government for price increase — the highest-ever in both cases.

Ogra had said both options had been worked out under the PTI government’s August 24, 2020, policy guideline. This had required calculations on the basis of existing sales tax and petroleum levy rates at the time of fortnightly review as well as full tax rates permissible under the law.

The regulator's working paper, seen by Dawn, had suggested that based on the existing tax rates — which were zero — the prices of all products should go up in a Rs22-52 per litre band to charge breakeven prices without any element of subsidy.

Under this option, the ex-depot price of high speed diesel (HSD) was worked out at Rs195.67 per litre against the existing rate of Rs144.15, showing an increase of Rs51.52, or 35.7pc. The ex-depot price for petrol would have risen by Rs21.60 (14.2pc) to Rs171.46 per litre from Rs149.86.

The same formula suggested the kerosene price at Rs161.61 per litre against Rs125.56 at present, up Rs36.03 or 28.7pc. The ex-depot price of light diesel oil (LDO) was calculated at Rs157.20 per litre against Rs118.31 at present, an increase of Rs38.89, or 32.9pc.

The second price scenario was based on full tax rates, including 17pc GST on all products, and Rs30 per litre petroleum levy each on HSD and petrol, followed by Rs12 on kerosene and Rs10 on LDO — the maximum rates permissible under the Finance Bill.

In this case, Ogra had worked out the ex-depot price of HSD at Rs264.03 per litre against Rs144.15 at present, an increase of Rs119.88 or 83.2pc. Likewise, the price of petrol was calculated at Rs235.16 per litre against Rs149.86 at present, up by Rs85.30 or 57.4pc.

The ex-depot price of kerosene, with full taxes, was worked out at Rs203.42 per litre against the existing rate of Rs125.56, an increase of Rs77.86 or 61.8pc. The LDO price was calculated at Rs195.62 per litre against Rs118.31 at present, an increase of Rs77.31 per litre or 65.34pc.