ISLAMABAD: Oil and Gas Regulatory Authority (Ogra) has proposed increase in the prices of motor spirit (petrol) by Rs7 per litre and high-speed diesel (HSD) by Rs8 per liter in a fortnightly review for September 1st, a source said.

The spokesman for OGRA, however, stated he has no information about sending summary to the federal government.

Sources maintained that the regulator forwarded its proposals in this regard to the Petroleum Division recommended increase in prices of kerosene oil and light diesel.

The prices have been computed on the basis of present rate of petroleum levy at Rs30 per liter, which is currently less than Rs26 per litre on both petrol and diesel.

First time, the Ogra is determining price of petroleum products on fortnightly basis and shift the Pakistan State Oil’s (PSO’s) price benchmark to Platts indexes with effect from Sept 1, 2020.

Market experts believe the federal government is likely to increase the prices of petrol and HSD by Rs3 per litre to Rs4 per liter, if the rate of petroleum levy is kept at current level.

The directive has been issued to the regulator in line with the decision of the Economic Coordination Committee (ECC) on July 28, 2020 after fuel crises hit various parts of the country.

Under the new guidelines, the Oil Marketing Companies (OMCs) and refineries will determine the ex-refinery prices of petrol and HSD on Arab Gulf Platts daily FOB average for the number of days in the pricing period as the base commodity price.

Premium above Platts, freight and incidentals to be taken as average of the PSO's procurement for the pricing period, and added to the base commodity average price in a as per existing practice.

Taxation and levies will be applicable rates.

Exchange rate to be used as provisionally available for the PSO but to be converted to actual upon retirement of LC (not later than 60 days from B/L date), any adjustment to be made as prior period adjustment as per present practice, already approved by the ECC vide its decision taken on April 9, 2020.

Other cost components may also be adjusted on actual basis in the next fortnight/month.

The PSO would arrange long-term agreement of petrol to avail discounted premium as prevailed in case of HSD and Kuwait Petroleum Corporation (KPC).

In case of non-availability of the PSO's premium/freight or incidentals of previous fortnight, the PSO's previous month available incidentals of a fortnight will be applied.

Copyright Business Recorder, 2020