Up to 13.5 percent cut in prices of POL products recommended

The Oil and Gas Regulatory Authority (Ogra) has recommended up to 13.5 percent reduction in the prices of petroleum products for the month of January 2019. The regulatory authority has suggested that prices of petrol may be reduced by Rs 9.50 per litre (10 percent), high speed diesel (HSD) by Rs 15 per litre (13.5 percent), kerosene oil by Rs 0.25 and light diesel oil (LDO) by Rs 2.00 per litre for the month of January 2019. The Ogra has forwarded the summary to the Ministry of Energy, Petroleum Division.
If the government accepts this recommendation, petrol price would go down from the existing Rs 95.83/litre to 86.33 a litre, LDO price will go down from existing Rs 77.44 to Rs 75.44 per litre, HSD price will come down to Rs 95.94 per litre from the existing Rs 110.94 a litre and kerosene price will be reduced to Rs 83.25 from the existing price of Rs 83.50 per litre. The government will take the final decision on the Ogra''s recommendation on Monday next.
The regulatory authority recommended decrease in prices of petroleum products by calculating them at 17 percent general sales tax (GST).
For current month, the Federal Board of Revenue (FBR) increased sales tax on diesel from 12 percent to 13 percent while for petrol it was increased from 4.5 percent to 8 percent. However, the sales tax on petrol is still low as compared to the standard rate of sales tax which is 17 percent. The regulator recommended a decrease in the prices of petroleum products of up to 13.5 per cent after the rates of crude oil dropped down in the international market. Oil prices dipped below $50 a barrel in November. The average for the month was $65/ barrel. Experts believed higher US supplies would flood the market at the same time slowing global growth would cut into demand. Saudi Arabia and Russia had also produced oil at record levels.
On December 7, 2018, the OPEC agreed to cut 1.2 million barrels per day from the October level. Members would cut 800,000 barrels per day and allies would cut 400,000 bpd. Cuts would continue for six months. OPEC''s goal is to return prices to $70 a barrel by early fall 2019. The price drop occurred just two months after global oil prices hit a four-year high of $81.20/b on September 24, 2018.