ISLAMABAD- In a move to calm down public sentiments on rising oil prices, the government on Wednesday reduced profit margin of oil marketing companies, retail dealers and also cut duties, enabling it to save Rs 30 to 35 billion annually. The Economic Coordination Committee of the Cabinet rationalised the petroleum products price fixation formula. "Changes in formula will help the government to save Rs 5 per liter on petrol and Rs 3.25 per liter on diesel on existing rates but the prices of petroleum products will remain unchanged", said the Finance Minister, Syed Naveed Qamar after chairing the ECC meeting. The government expects to earn about Rs five billion per annum on petrol and save another Rs 20 billion on subsidy on diesel. The government had increased petroleum products prices by seven times during the last five months. These upward revisions have brought inflationary storm in the country, making life miserable for the poor people. The government was providing a subsidy of Rs 35.42 per liter on diesel and after the changes the subsidy on diesel would come down to Rs 27 per liter, said the Finance Minister. There is no subsidy on petrol and Rs five per liter earning will be used to subsidize diesel. It reduced deemed duty from ten per cent to 7.5 per cent. The government allowed oil-marketing companies to charge ten per cent deemed duty about eight years back. The move would enable the government to save Rs 15 billion annually. He said the government had asked to Petroleum Ministry to work to further reduce the deemed duty. It also reduced customs duty from ten per cent to 7.5 per cent. The government capped the profit of oil marketing companies and oil retail dealers at US $ 100 per barrel. The government irrespective of crude oil price in international market would give profit to the oil distributors and retailers at US $ 100 per barrel.  It also reduced the number of oil depots from 29 to 13, which would reduce transportation cost. Acting Secretary Petroleum G A Sabri told TheNation," based on the last fortnight oil prices, changed on July 21, the petroleum products formula rationalization would enable the government to save about Rs 30 billion per annum". The deemed duty was imposed for the protection of oil refineries in Pakistan and the government asked the refineries to expand their operational activities in the country. The companies at the end of the day could not enhance their strategic reserves as desired by the government and the duty became an important source of earning for them. Senator Ruksana Zubairi, of PPP who was the major force behind current change in petroleum products formula, told TheNation that it was a welcome step adding, " Complete withdrawal of deemed duty is necessary to rationalize oil marketing companies profit".  The government also took back the right of determining freight charges from the Oil Companies Advisory Committee and handed it over to Oil and Gas Regulatory Authority, effective from September 01.  Dr Kaiser Bengali, an economist, said " Its not entire all the way but the government has gone half of the way by rationalizing petroleum products formula". He said the move would reduce the government dependence on State Bank of Pakistan borrowings, which were inflationary in nature. "It would ultimately bring down the inflation pressure". The Finance Minister while commenting on a recent Governor State Bank, Dr Shamshad Akhter statement said, "the government was not massively borrowing". The Governor had said the unprecedented borrowing by the federal government was fueling inflation in the country. The Minister said, "it was seasonally bump of July". The Central Bank Governor also said that the Bank could bounce back the government cheque. The Minister reminded the Governor SBP, the cheques should have been bounced back in the previous government". The Finance Minister said the high borrowings, reflecting on the government balance sheet, were actually of the last regime, which did not pay dues to oil marketing companies.