Prices of major petroleum products would rise if the government decides to pass on the entire recent rise in the international price of crude on to consumers - from an average of 28 dollars per barrel last month to 33 dollars per barrel in March. International price of crude registered $37per barrel in Arab Gulf Market, $39 per barrel US crude and 41.40 Brent oil on 24 March 2016.
According to sources in the Ministry of Petroleum and Natural Resources, the government is unlikely to pass on the increase in the international crude price to domestic consumers and is instead likely to absorb it through a revision in taxes - customs duty, Petroleum Levy and/or sales tax. Sources pointed out that in the past when Minister for Finance, Ishaq Dar, did not wish to pass on an increase/decrease in the international price of oil he adjusted the petroleum levy accordingly; and cited Dar's decision to slash PL in February and March 2015 and in January 2016 when Oil and Gas Regulatory Authority (OGRA) recommended an increase in POL prices. As per a senior official, the government decides to pass on the recent rise in fuel price to the end consumers then it would have to increase petrol price by Rs 1.5-2 per litre, High Speed Diesel (HSD) by Rs 2 per litre, High Octane Blending Component (HOBC) by Rs 3 per litre, Kerosene Oil (KO) by Rs 2.5 per litre and Light Diesel Oil (LDO) by Rs 2 per litre.
The cost of keeping prices unchanged on the exchequer would be Rs 2 billion, the official stated. The government is collecting Rs 10 per litre as Petroleum Levy on Petrol, Rs 8 per litre on HSD and Rs 14 on HOBC. At present, Crude oil and refined petrol are subject to minimum customs duty of 2 percent, 5 percent customs duty is imposed on furnace oil and 10 percent on HSD.
From February 2016 the government fixed Rs 14.48 per litre GST on petrol (Motor Spirit), Rs 29.58 per litre on HSD, Rs 18.57 per litre on HOBC, Rs 9.63 per litre on LDO and Rs 10.40 per litre on kerosene oil. Officials said the OGRA after monitoring and calculating crude oil imports in the current month will forward a final summary to Ministry of Petroleum and Ministry of Finance on March 30 for a final decision.
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