ISLAMABAD: Based on the existing high tax rates, the Oil and Gas Regulatory Authority (Ogra) recommended on Friday up to 12 per cent reduction in prices of all petroleum products, except kerosene oil, for the month of March.

In a summary sent to the government, Ogra said that a substantial reduction in oil prices had been witnessed in international market in February. The benefit of this decline in prices should be passed on to consumers, it said.

In its working paper, the regulator recommended a reduction of 11.9pc in the price of petrol, 6.2pc in that of high speed diesel (HSD), 3.95pc in that of high octane blending component (HOBC) and 4.93pc in that of light diesel oil (LDO).

Ogra proposed an increase of about 3.8pc in the price of kerosene.

An official said that prices of petroleum products could be brought down by up to 55pc if the general sales tax rate was reverted to the normal 17pc, but the government had continued to offset losses in revenue collection through the highest-ever tax rates on them.

He said that prices of crude oil and allied products had declined by 15 to18pc in the international market.

Ogra has formulated its working paper on the basis of the existing tax rates under instructions from Finance Minister Ishaq Dar.

The federal petroleum minister promised in his recent public statements that benefit from the decline in international prices of the products would be passed on the consumers.

The final prices will be announced on Monday after approval by the prime minister.

Based on the existing tax rates and PSO purchases from the international market, Ogra worked out a reduction of Rs8.48 per litre in the ex-depot price of petrol (motor gasoline) for March to Rs62.77 from the existing Rs71.25.

It recommended that the ex-depot price of HSD be brought down by Rs4.67 to Rs71.12 from Rs75.79 per litre.

It also worked out ex-depot price of light diesel oil at Rs37.97 per litre, down by Rs1.97 from Rs39.94.

Likewise, Ogra calculated the price of high octane blending component at Rs72.62 per litre instead of Rs75.60 — a decrease of Rs2.98.

Ogra proposed that ex-depot price of kerosene be increased by Rs1.66 per litre to Rs44.91 from the existing Rs43.25.

Currently, the government is collecting about Rs25 per litre on petrol in the form of a fixed sales tax of Rs14.58 and Rs10 as petroleum development levy. Similarly, the government is collecting about Rs38 per litre in taxes on HSD, including a fixed sales tax of Rs29.57.

Petrol and high speed diesel are the two major products which generate most of the revenue in the oil sector.

The HSD sale across the country on an average is 600,000 tons per month against the consumption of around 400,000 tons of petrol, while kerosene sales are less than 10,000 tons and those of the HOBC less than 6,000 tons.

Published in Dawn, February 27th, 2016