Prices of petroleum products cut after considerable confusion

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Prices of petroleum products cut after considerable confusion

ISLAMABAD: Amid confusing statements by some cabinet members, the government on Friday announced a reduction in prices of petroleum products by up to 5.8 per cent for the month of September owing to decline in prices in the international market.

It all started when Special Assistant to the Prime Minister on Information Dr Firdous Ashiq Awan announced the price cuts through her Twitter account, saying the government would pass on the benefit of lower prices in the international market to the public.

Later, Special Assistant to the Prime Minister on Petroleum Nadeem Babar told Dawn that “as per policy implemented last month, the government has decided to pass full impact of price reduction”.

However, this was soon contradicted by the finance ministry. “The new POL prices being reported in a section of the media are not correct. Official press release in this regard shall be issued tomorrow evening,” said a ministry statement received through WhatsApp.

5.8pc reduction announced for September

As the confusion continued and various cabinet members engaged in talks, Energy Minister Omar Ayub Khan took to Twitter to announce that the government was extending full benefit of the price reductions in the international market to the people. He also issued a written statement about price adjustments.

In time the cabinet members “agreed” to pass on partial benefit of reduction in the price of high speed diesel (HSD) to consumers. It was agreed that the price of HSD would be cut by 4pc and the government would retain 1.8pc as “windfall revenue”.

Over the past few months, the petroleum and finance divisions have refrained from announcing petroleum prices and have been quietly urging the oil companies to increase rates.

Based on import invoices of the Pakistan State Oil (PSO) and existing taxes at elevated levels, the Oil and Gas Regulatory Authority (Ogra) had worked out a reduction of Rs4.59 per litre in the price of petrol (motor spirit) and Rs7.67 per litre in that of HSD.

The Ogra had calculated Rs4.27 per litre cut in the price of kerosene oil and Rs5.63 per litre decrease in the rate of light diesel oil (LDO).

An official said the price of crude oil had declined by more than 12pc in Arabian Gulf, from $72 on April 28 to $59 per barrel on Aug 30, but the government has been increasing tax rates over the past few months to meet IMF targets.

Based on import parity price of the PSO for purchases in August, the ex-depot rate of HSD has been fixed at Rs127.14 per litre for Sept against Rs132.47 per litre at present.

Likewise, the ex-depot price of petrol has been brought down by about 3.9pc to Rs113.24 per litre instead of Rs117.83 per litre at present.

The ex-depot price of LDO has been reduced by Rs5.63 per litre (5.8pc) to Rs91.89 per litre instead of Rs97.52 at present. The price of kerosene oil has been fixed at Rs99.57 per litre instead of Rs103.84, showing a reduction of about 4.1pc.

The government is currently charging 17pc general sales tax on all petroleum products. Besides the GST, the government is charging petroleum levy at a rate of Rs18 per litre on HSD, Rs15per litre on petrol, Rs6 on kerosene oil and Rs3 per litre on LDO.

Petrol and HSD are the two major products that generate most of the revenue for the government because of their growing consumption in the country.

The petroleum prices in the country have generally been on the rise since early 2017.

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