POL prices likely to shoot up by Rs 3 to 6

The government is likely to fully pass on the impact of increase in POL prices as estimated by the Oil and Gas Regulatory Authority (OGRA), which has recommended an increase of Rs 3.11 to Rs 6.29 per litre on various products with effect from February 1. An official source told Pakistan Today OGRA had estimated an increasing trend in international POL prices, as oil prices had increased from $111 per barrel to $114 per barrel in January, while the rupee had devalued by 1.2 percent as compared to the US dollar during the current month.
OGRA had recommended increasing the price of petrol by Rs 5.37 per litre to Rs 94.91 per litre, High Octane Blended Component (HOBC) by Rs 6.29 to Rs 118.20 per litre, High Speed Diesel (HSD) by Rs 3.11 to Rs 101.93 per litre, Light Diesel Oil (LDO) by Rs 3.43 to Rs 90.21 per litre and Super Kerosene Oil (SKO) by Rs 2.78 to 92.02 per litre. Previously, OGRA had notified increase in petrol prices by Rs 1.65 per litre to Rs 89.94 per litre, HOBC increased by Rs 5.13 to Rs 111.91 per litre with effect from January 1, 2012. The prices of HSD, LDO and SKO were retained at last month’s level of Rs 98.82, Rs 86.78 and Rs 89.24 per litre respectively. The source said OGRA had calculated new prices of POL products based upon the existing petroleum levy (PL) of Rs 10 per litre for petrol, Rs 7.62 for HOBC, Rs 5.18 for HSD, Rs 2.72 for LDO and Rs 4.82 for SKO. To save the people from the negative impact of inflation because of increase in POL prices, OGRA had again recommended lowering PL on petrol and diesel. The Petroleum Ministry, said the source, was supporting OGRA’s recommendation by stressing that the reduction in PL on petrol and diesel could bring their prices at par with CNG, which would help reduce the demand for natural gas. Nearly 3.5 million vehicles run on CNG in the country, with an estimated consumption of 290 mmcfd.
However, the Finance Ministry had rejected the proposal last month. The government collects Rs 23 billion per month by taxing POL products. It collects Rs 16 billion per month in sales tax on POL products while another Rs 7 billion are collected as PL. Pakistan’s annual POL demand is about 20 million tonnes, 400,000 barrels each day, out of which only 15 percent is met through local resources while the rest of the 85 percent is imported as crude oil and deficit refined petroleum products such as motor spirit, HSD and furnace oil. The estimated import volumes of crude oil, HSD and furnace oil were 8.4 million tonnes, 4 million tonnes and 9 million tonnes respectively for the last fiscal year, for which the import bill was more than $12 billion.