Pad up for an increase in petroleum prices

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ISLAMABAD – The government is still undecided whether to pass on the complete effect of the increase in international oil prices to the consumers, which the Oil and Gas Regulatory Authority (OGRA) estimates at Rs 7 to Rs 12 per litre.
An official source said OGRA had submitted its report on the international oil prices that have averaged $111 per barrel in the Gulf market during the month of March. OGRA has assessed 10 to 12 percent increase in oil prices in the international market and has recommended an increase of Rs 7.35 per litre in petrol, Rs 10.15 for HOBC, Rs 11.28 in LDO, Rs 10.12 in HSD and Rs 12.05 in Kerosene oil.
He said the Ministry of Finance had stressed passing on the maximum impact on to the consumers to maintain the fiscal deficit under five percent of the GDP as agreed with the International Monetary Fund. The government had set a budgetary estimate of collecting Rs 110 billion under petroleum levy (PL) but it was later reduced to Rs 90 billion for the current fiscal year.
The government had estimated collecting Rs 10 per litre as levy on petrol and Rs 8 per litre on diesel, but due to the increase in international prices, it was collecting only Rs 3 per litre on petrol and Rs 0.44 per litre on diesel.
The government claims that it has already absorbed an impact of Rs 20 billion due to rise in oil prices triggered by protests in the Arab world. If prices were not increased to the maximum level, it would have to absorb another impact of Rs 10 billion during April.