ISLAMABAD: Owing to sharp decline in crude oil prices in the international market, the Oil and Gas Regulatory Authority (Ogra) has recommended to the government to reduce petroleum prices by up to Rs44 per litre for May 2020,
The regulatory body has suggested that the price of diesel may be reduced by Rs33.94 per litre (or 31.6%), petrol by Rs20.68/ litre (21.4%), kerosene oil by Rs44.07/ litre (56.9%) and light diesel oil (LDO) by Rs24.57/ litre (39.3%).
If the government accepts the suggestion of the Authority, petrol price will come down from current Rs96.58/ litre to Rs75.9/ litre and diesel price will reduce to Rs73.31/ litre from current Rs107.25/litre.
Similarly, the LDO price will come down to Rs37.94/ litre from current Rs62.51/ litre and kerosene price will come down to Rs33.38/ litre from current Rs77.45/litre.
Petroleum levy increased to meet revenue shortfall
It is worth mentioning that the government is also charging 17% general sales tax (GST) on all petroleum products. Apart from it, the government is also collecting petroleum levy (PL) on these products, which is directly taken from consumers.
The government, in order to meet the revenue shortfall for March 2020, had increased the petroleum levy (PL) on these products. The PL on diesel was increased by 7.05 to Rs25.05 per litre.
The levy on petrol was increased by Rs4.75 to Rs19.75 per litre from earlier Rs15 per litre. PL on kerosene was also increased by Rs6.33 to Rs12.33 per litre and PL on LDO was increased by Rs1.94 to Rs4.94 per litre.
Summary moved to energy ministry
Ogra has moved the summary to the Ministry of Energy (Petroleum Division) and it will then forward this document to the finance ministry for approval. The government would take a decision on it later today.
According to the summary, the regulator has suggested to charge PL of Rs24.20/liter on diesel, Rs18.9/ litre on petrol, Rs6 on kerosene and Rs3 a litre on LDO.
It is worth mentioning that due to COVID-19, there is a glut of oil, as supply is high while demand is much low, so the prices have touched even negative this month.
This month, when international future contracts of the month of May were expiring, the crude price even touched minus $54/barrel. On Wednesday, the future month of June contracts price was less than $15/barrel.
Economist opposes lowering fuel prices
Noted economist Dr Kaiser Bengali, however, has opposed the move to cut the POL prices in the country.
“Domestic fuel prices must NOT be reduced, surplus must be used to: (1) liquidate circular debt, it will stabilize fiscal base n (2) lower GST Goods rate, it will boost industry n employment,” Bengali said in a statement on Thursday.