The Oil and Gas Regulatory Authority (OGRA) gave a New Year gift to the nation on Friday by raising prices of petroleum products by up to PKR7.69 per liter, or nine per cent.
They declared this trudge in prices after getting a green signal from Prime Minister Yousuf Raza Gilani. As a result, the rate of petroleum levy, which had been reduced last month, increased to PKR1.71 ($0.02) per liter on diesel, 16 paisa ($0.002) on HOBC, 31 paisa ($0.004) on kerosene and 73 paisa ($0.009) on light diesel oil.
According to a notification issued by OGRA, the price of petrol increased by PKR6.71 ($0.08) (9.2 per cent) per liter to PKR79.67 ($0.93) from PKR72.96 ($0.85), HOBC (high octane blending component) by PKR7.69 ($0.09) (8.9 per cent) to PKR94.36 ($1.10) from PKR86.67 ($1.01), kerosene by PKR4.04 ($0.05) (5.7 per cent) to PKR74.99 ($0.87) from PKR70.95 ($0.83) and LDO (light diesel oil) by PKR4.36 ($0.05) (6.55 per cent) to PKR70.97 ($0.83) from PKR66.61 ($0.78).
OGRA spokesman Syed Jawad Naseem, who pronounced the new prices, said that prices of kerosene, HSD, petrol and furnace oil had increased by 8.8, 9.3, 12.7 and 7.4 per cent, respectively, in the international market.
The industry has already been under pressure because of higher electricity and gas rates and energy shortfalls. As a result of the increase in petroleum prices, the size of GST has increased proportionately because the tax at 16 per cent results in higher windfall revenue for the government.
Federal Minister for Petroleum and Natural Resources Syed Naveed Qamar said that the government had to increase prices of petroleum products because of a surge in international prices. He spoke that in the international markets the price of crude had jumped from $80-$82 to $94-$95 a barrel due to economic growth in the West. And because up to 85 per cent of the crude is imported, the government had to enhance the local prices of petroleum products.
Mr. Qamar said the existing fiscal position in the country did not allow the government to reduce the taxes or offer subsidies to people. However, the authorities were trying to mitigate the effects of the taxes.
The minister said the government did not want to resort to deficit financing, as had been done by the previous government, because this would fuel inflation further. “So, we all have to take this bitter pill,” he remarked.In the next budget, revenue generation would have to be improved coupled with better resource mobilization in order to “take the public sector development program to a somewhat reasonable level”, the minister said.