ISLAMABAD: Based on presumed higher tax rate, the Oil and Gas Regulatory Authority (Ogra) on Monday worked out a substantial increase in the prices of all petroleum products with effect from March 1 (tomorrow) for the next 15 days.

In a summary sent to the government, Ogra recommended an increase of 2.7 per cent in the price of high-speed diesel (HSD), 4.15pc in petrol, 41pc in kerosene and 25.2pc in light diesel oil (LDO).

Interestingly, Ogra did not take into account the notified rate of general sales tax at 29.5pc on HSD and instead applied 31pc rate of GST to recommend higher HSD price to the desire of the finance ministry. This is the third time in a row that the regulator has followed finance ministry’s instruction to adopt 31pc GST to calculate HSD price, even though this rate was abolished on Dec 31, 2016.

Informed sources said the officers at the Ministry of Petroleum and Ogra were under extreme pressure not to disclose tax rates on various products to the media to avoid ‘unnecessary’ controversies in parliament.

An Ogra official said the regulator had calculated the prices on the basis of imports made by Pakistan State Oil (PSO) in the last fortnight and notified GST and petroleum levy rates on all products except for HSD where it applied 1.5pc higher than notified GST rates.

Finance Minister Ishaq Dar is expected to announce a formal government decision after consulting the prime minister on Tuesday. In line with an ongoing practice, the government is expected to pass on a partial increase in petroleum prices, these sources said.

An official said the Ministry of Petroleum and Ogra have been recommending for many months a substantial increase in the prices of kerosene and LDO to minimise a huge price differential with petrol. The differential of about Rs25 per litre between petrol and the two other products was encouraging some market operators to mix kerosene with petrol for higher profits and resulting in adulterated and poor quality petrol in the market instead of higher-grade fuel, which has a research octane number (RON) of 92.

As such, the regulator recommended an increase of Rs17.55 a litre in the price of kerosene to Rs60.8, up by 40.58pc from its existing rate of Rs43.25. During the last fortnight, too, Ogra suggested a raise of Rs16 on litre of kerosene, but its price was kept unchanged by the government saying it wanted to protect the poor.

Interestingly, kerosene is the only regulated petroleum product but is not available below Rs80 in the open market while all other products are deregulated and are available reasonably within the price band announced by the government.

On Monday, Ogra calculated an increase of Rs2.96 a litre in ex-depot price of petrol (92RON) to Rs74.25 a litre, up by 4.15pc from the existing rate of Rs71.29 a litre.

Likewise, the regulator worked out an increase of Rs2.18 a litre in the ex-depot price of HSD at Rs82.66 a litre, up 2.7 per cent from the current rate of Rs80.48.

Similarly, Ogra recommended an increase in the ex-depot price of Rs12.53 a litre in the price of LDO to Rs54.28, showing an increase of 25.24pc from its existing rate of Rs43.34 per liter.

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

Published in Dawn, February 28th, 2017