ISLAMABAD: The government is likely to keep the prices of petroleum products largely unchanged for November as the Oil and Gas Regulatory Authority (Ogra) has worked out minor adjustments in the costs of various imported products.

A senior official at the ministry of energy said that Ogra had worked out an increase of Re1 and 27 paisa in the prices of every litre of petrol and high speed diesel (HSD), respectively. On the other hand, it proposed a reduction of Rs2.39 and Rs6.56 respectively in the prices of every litre of kerosene and light diesel oil (LDO).

According to him, the government will be losing only about Rs650 million if it keeps the prices largely unchanged for next month, but will earn a lot of goodwill at a time when opposition parties are holding big protest rallies.

The official said a decision in this regard would be announced on Thursday (today) by the finance division after the approval of prime minister.

Based on the import parity price of Pakistan State Oil for purchases in September, the regulator has worked out the ex-depot price of HSD at Rs127.41 per litre instead of Rs127.14 at present, showing an increase of 0.2 per cent (or 27 paisa per litre).

Likewise, the ex-depot price of petrol is proposed to be increased to Rs114.24 per litre from the existing rate of Rs113.24, an increase of 0.88pc (or Re1 per litre).

The regulator has worked out the ex-depot price of LDO at Rs85.33 per litre against the existing rate of Rs91.89, which means a reduction of 7.13pc or Rs6.56 per litre. Similarly, the ex-depot price of kerosene has been worked out at Rs97.18 per litre for November instead of Rs99.57 at present, which means a reduction of 2.4pc (or Rs2.39 per litre).

The official explained that the government would gain Rs750m on account of increase in the prices of HSD and petrol but would lose about Rs100m due to decrease in the prices of kerosene and LDO. The net revenue loss to the government would, therefore, be about Rs650m.

The government has already increa­sed the general sales tax for all petroleum products to a standard rate of 17pc to generate additional revenues. Until January, the government was charging 0.5pc GST on LDO, 2pc on kerosene, 8pc on petrol and 13pc on HSD.

Also, the government has in recent months more than doubled the rate of petroleum levy on HSD to Rs21 per litre against Rs8 per litre, while the levy on petrol has been increased by 50pc to Rs17.2 per litre instead of Rs10 per litre. The petroleum levy on kerosene oil and LDO is currently being charged at the rate of about Rs5 per litre.

The government has begun increasing petroleum levy rates to partially offset a revenue shortfall of over Rs113 billion faced by the Federal Board of Revenue in the first quarter of the current fiscal year.

The levy remains in the federal kitty unlike the GST that goes to the divisible pool, of which about 57pc is grabbed by the provinces.

Petrol and HSD are the products that generate much of the revenue for the government due to their massive and yet growing consumption in the country. About 800,000 tonnes of HSD are sold every month in the country against a monthly consumption of around 700,000 tonnes of petrol. The sales of kerosene oil and LDO are generally less than 10,000 tonnes per month.

Last month too the government had kept the petroleum prices unchanged, earning windfall revenue of over Rs4.5bn in the process. The regulator had proposed a 2.6pc reduction in the prices.

Published in Dawn, October 31st, 2019