- Price of kerosene oil cut by Rs3 per litre, light diesel oil by Rs5
ISLAMABAD: Finance Minister Asad Umar on Friday announced that the fuel prices will be decreased by Rs2 per litre, rejecting the proposed hike by the Oil and Gas Regulatory Authority (OGRA).
Addressing a press conference in the federal capital, Umar explained how fuel prices are determined for the consumers. Moreover, he said that the prices for the upcoming month are determined on the basis of the current month’s average prices.
Price of kerosene oil has been cut by Rs3 per litre, whereas light diesel oil price has been slashed by Rs5 per litre. In addition to that, the price of domestic gasoline has been decreased by Rs2 per litre.
“We are trying to pass the benefit onto the consumers,” Asad said.
“The price is set when the ship [carrying fuel] starts moving from [its point of origin],” he said.
“When we got the recommendations for October, there had been a rise in prices in the international market and the rupee value had fallen. So according to OGRA’s calculations, there was to be an increase.”
Umar further said, “The prices had just been set at that time. We thought about it a lot, we thought it would be a temporary phenomenon, so we shouldn’t pass it on immediately. So we didn’t increase any prices that month.”
“We didn’t increase prices for consumers, so we had to decrease the tax rates,” he explained.
“Then the month after that, there was an even greater increase. In October, it was $84-85. We thought this would be too much of an increase, so we raised the price only half as much as was recommended and had to decrease the sales tax and petroleum development levy,” the finance minister said.
“If I compare, the sales tax on diesel in May was 27.5 per cent, while in November it was just 12pc ─ less than half. The 15pc GST on petrol was reduced to 4.5pc. The petroleum levy on diesel was set at Rs6.51 from Rs8 and on petrol from Rs10 to Rs6.15,” he added.
“The purpose of doing this was that, since prices were rising, we wanted to reduce the pressure on citizens by decreasing the tax rate. Luckily, the international prices started falling in November,” Asad Umar said.
OGRA on Thursday had sought an increase of up to Rs10 in the prices of petroleum products. In a summary forwarded to the petroleum division, the authority had recommended an increase of Rs6.21 per litre in petrol prices, Rs2 per litre in diesel prices, Rs9.91 in kerosene oil prices and Rs7.79 in light diesel prices.
In the global market, oil prices gained on Thursday after the US benchmark slid below $50 a barrel following reports Russia could join a production cut at next month´s OPEC meeting.
The gains in petroleum prices came on a mixed day for global stocks as traders worldwide weighed Federal Reserve comments that were widely seen as dovish on monetary policy.
Robust petroleum supply and a weakening global economic outlook have weighed on oil prices since early October, pushing US benchmark West Texas Intermediate below $50 a barrel for the first time in more than a year.
But oil prices reversed following reports that Russia could join Saudi Arabia and other producers in cutting output at a December 6 Vienna meeting to defend prices.