ISLAMABAD – The government announced a 9.9 percent increase in prices of petroleum products across the board on Monday to lower its fiscal deficit and said it would still have to absorb a differential of Rs 5 billion in March alone because it was not passing on the full impact of the price increase to consumers.
Oil and Gas Regulatory Authority Senior Executive Director of Finance Syed Jawad Naseem said that the price of petrol had been increased by Rs 7.23 per litre from Rs 72.96 to Rs 80.19 per litre, of HOBC by Rs 8.58 to Rs 95.25 per litre, high speed diesel (HSD) by Rs 7.76 to Rs 86.09 per litre, light diesel oil (LDO) by Rs 6.60 to Rs 73.21 per litre and kerosene by Rs 7 to Rs 77.95 per litre.
The government, he said, would have had to bear a Rs 13 billion deficit in March if prices had not been increased, and that even after the partial increase the government would have to absorb Rs 5 billion on its own. He also said that the increase in prices would allow the government to collect petroleum levy (PL) of Rs 6.25 per litre for motor spirit as compared to Rs 2.20 per litre previously. Similarly, the government would collect PL of Rs 9.8 per litre for HOBC as compared to the erstwhile Rs 4.8 per litre, Rs 3.75 per litre for HSD as compared to the erstwhile Rs 0.55 per litre, and a first-time levy of Rs 0.25 per litre for kerosene while LDO would remain levy-free as before.
Other than the PL the government would also increase its income through the sales tax, which would go up to Rs 11.65 per litre for petrol from Rs 10.6 per litre, Rs 13.84 per litre for HOBC from Rs 12.59 per litre, Rs 11.33 per litre for kerosene from Rs 10.31 per litre, Rs 10.64 per litre for LDO from Rs 9.68 per litre and Rs 12.51 per litre for HSD as compared to the erstwhile Rs 11.38 per litre. He said POL prices had increased 23.4 percent for MS 95 RON, priced $88.55 per barrel on November 1, 2010, to $109.3 per barrel on March 01, 2011, and a similar increase was seen in other POL products.
Under the new framework for POL products, he said, the import incidental had been excluded from the ex-refinery price according to an ECC decision on deregulation of petroleum products. Economists said the increase in POL prices would further increase inflationary pressure.
