ISLAMABAD - Oil and Gas Regulatory Authority (Ogra) has recommended the government to increase price of motor spirit (petrol) by Rs1.48 per litre for December 2017 and the ex-refinery price of high speed diesel (HSD) by Rs 1.2 per litre.

According to a working paper moved to the Ministry of Energy (Petroleum Division) and the Ministry of Finance, OGRA has recommended an increase of up to 28.9 percent in the prices of different petroleum products, it was learnt reliably here. The Ogra also proposed an increase of Rs15.35 per litre in price of superior kerosene oil and Rs 13.15 per liter increase in light diesel oil (LDO) rate.

According to a working paper moved to the Petroleum Division and the Ministry of Finance, the Ogra has proposed to increase petrol rate by 1.9 percent or Rs 1.48 per litre. It is pertinent to mention here that the Economic Co-ordination Committee (ECC) deregulated margins on HSD for oil marketing companies (OMCs) and dealers. The ECC approved the deregulation of HSD price with a directive that the impact of the policy would be reviewed after three months. The Ogra would develop a mechanism to monitor the OMCs commercial stock position, inventory system and fuel marker system.

The ex-refinery price of HSD is Rs 50.07 in November and OGRA has recommended an increase of Rs 1.2 per litre which will increase the price of HSD to Rs 51.27 per litre. The dealer and OMC margin will be decided by the OMCs while GST and Petroleum Development Levy (PDL) will be determined by the petroleum and finance divisions.

According to a working paper moved to the Energy Ministry (Petroleum Division) and the Ministry of Finance, the regulator Ogra proposed an increase of Rs 15.35 per litre in price of superior kerosene oil and Rs13.15 per liter increase in light diesel oil (LDO), which meant a hike of 28.9 percent per litre and 26.8 percent per litre respectively.

The final decision regarding the OGRA recommendation will be made following approval of Prime Minister Shahid Khaqan Abbasi.

In case the government approves the OGRA’s determination about the increase in prices of petroleum products, petrol price will go up to Rs 77.47 per litre from the current Rs 75.99 per litre. Similarly, the prices of kerosene oil, after an increase of Rs15.35, will go up to Rs 68.54 per litre from the existing Rs 53.19 per litre and the price of LDO will go up with an increase of Rs13.15 per litre to Rs 62.15 from existing Rs49.00 per litre. The price of HSD will be determined after adding taxes, PDL, dealer and OMC margin. OGRA was against the deregulation of the prices of High Speed Diesel and argued that such an incentive was misused in the past for earning profit. The increase in the price of HSD and its deregulation will have direct impact on the agriculture and transport sectors as the fuel is mainly used in both these sectors. Similarly, kerosene oil is used for cooking purpose and therefore, despite Ogra’s recommendation, the government didn’t increase its price for a while.

Against the standard rate of 17 percent general sales tax (GST), currently the government is charging 31 percent GST on high speed diesel (HSD) and 17 per cent on other petroleum products including petrol, kerosene oil and LDO. In addition to GST, government was charging highest rates of Petroleum Development Levy (PDL) from the consumers. Currently, the consumers are paying Rs 10 per litre petroleum development levy on petrol, Rs 6 per litre on kerosene oil and Rs 3 per litre on LDO.