The caretaker government is unlikely to increase prices of petroleum products next month (July) as well, sources in Ministry of Petroleum told BR. Prime Minister Nasirul Mulk and Finance Minister Dr Shamshad Akhter stated that they would not take a decision like increasing petroleum prices, sources added.
Following the government decision not to increase the prices of petroleum products, the Federal Board of Revenue (FBR) was compelled to reduce the rate of GST on almost all the petroleum products. Against May's GST of 27.5 percent on high speed diesel (HSD) the rate for June was reduced to 17 percent while against 15 percent on motor spirit it was reduced to 7 percent; rate of GST on Super Kerosene oil has been reduced from 12 percent to 7 percent and from 11.5 percent on light diesel oil to one percent.
Sources in FBR maintained that the government will suffer approximately Rs 45 to Rs 50 billion revenue loss for June on account of sales tax and petroleum levy to maintain petroleum prices at the existing level for one month. The previous PML-N government on May 31 had deferred the POL price increase till mid-night June 7 and left it for the caretaker setup to make the final determination in this regard. However, the interim government has decided to maintain the oil prices for the rest of the month and rejected the summary of Oil and Gas Regulatory Authority (OGRA) to increase oil prices.
On 30th May, OGRA had recommended an increase of up to 16.9 percent in prices of petroleum products for June 2018. According to the OGRA summary, an increase of Rs 12.50 (12.7pc) was recommended in the price of HSD and Rs 8.37 per litre (9.5pc) in the price of motor spirit (petrol); Rs 8.23 per litre (10.3pc) increase was recommended in the price of kerosene oil and Rs 11.65 (16.9pc) in light diesel oil (LDO) rate. The prices of all petroleum products, except for kerosene, are deregulated and Ogra only monitors their prices.
On Friday, Brent Crude Oil price was $77.45 per barrel. Brent has been pushed up by voluntary production cuts led by the Middle East dominated producer cartel Organization of the Petroleum Exporting Countries (Opec) and by Russia, put in place in 2017. Opec and Russia are due to meet at Opec's headquarters in Vienna on June 22 to discuss production policy. Looming new U.S. sanctions against major oil exporter Iran have placed further pressure on the price of the commodity in the international market.
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