SALMAN ABDUHOO LAHORE The government has suffered the loss of over Rs 7.2 billion during Dec 2010-Jan 2011 for not passing on the immense raise of about $16 per barrel in prices of petroleum products at international market, it was learnt on Monday. The oil prices in the world market have jumped to $95 per barrel in Jan from $79.7 of Oct, registering an enormous raise of $16 per barrel in three months. The government had to provide subsidy of Rs 2.3 billion on petroleum products to the consumers in the month of Dec and financial support of Rs 4.8 billion in Jan to absorb the constant hike of almost $16 per barrel in global crude oil rates. The government had purchased Arab light crude at $83.4 per barrel in Nov 2010 but supplied it to the public at cheaper rates, keeping the petroleum rates unchanged to favour the public. Hence the government lost around $4 per barrel oil in this period, as the oil prices went up to $83.4 per barrel from $79.7 of Oct. To keep the angry masses calm, the government announced on Jan 7 withdrawal of the increase in prices of petroleum products following a sustained protest by almost all political parties and general public across the country. Announcing the decision to withdraw the increase in oil prices, the prime minister said it was a tough decision keeping in view the economic situation as actually the government had brought back the prices to the level of Oct 31 last year. In the aftermath of the decision the government had to bear the burden of Rs 5 billion because it supplied the oil to the consumer at Nov rate of $83.4 per barrel though it had purchased the commodity for $88.9 per barrel from international oil market. With a view to keep the rates down to favour the public the government had also reduced its Petroleum Levy to Rs 6.29 from Rs 8 per litre while the OMCs margins on petrol was also slashed to 3 percent from 4 percent. In absolute terms margins on petrol is now reduced to Rs1.5 per litre from Rs1.92 per litre. On the other hand margins on diesel remained fixed at Rs1.35 per litre. As per the oil price notification, the OMCs and dealers margins on petrol have been slashed by OGRA. The Oil Marketing Companies margins was fixed at Rs1.50 per litre on MS, Rs1.72 per litre on HOBC, Rs1.58 per litre on SKO and Rs 1.61 per litre on LDO, implying that the margins are fixed at oil price cap of $65/bbl. Margins on MS, HOBC, SKO and LDO was reduced by 21.9 percent, 21.8 percent, 24.8 percent and 22.2 percent respectively on monthly basis. Analysts said that world oil prices are now constantly rising on fears that mounting political tensions in Egypt would disrupt supplies flowing through the Suez Canal. New Yorks main contract, light sweet crude for March delivery, was up 37 cents to $89.71 per barrel. Similarly, Brent North Sea crude for March rose 18 cents at $99.60. Experts said that the rising prices reflect continued tension in Egypt and the possibility that there would be supply constraints through the Suez Canal, as about one million barrels of oil per day pass through the Suez Canal. Experts said that the government has so far lost over Rs 7 billion in the last three months for not passing on the raise of about $16 per barrel in prices of petroleum products at international market. And if it did not raise the rate while fixing the prices for the month of Feb, the loss will be escalated further, as the gap of purchase and sale will be widen by more than $16 per barrel in Feb.