Pakistan Might See A Hike In Petrol Prices As OGRA Increase The Price

Although OGRA has increased the price of petrol and the newly elected PM now has to make the choice to lift the freeze on petrol prices or not.

OGRA (Oil and Gas Regulatory Authority) proposed an extraordinary hike in petroleum product prices up to Rs120 per litre (over 83%) with effect from the 16th of April to recoup full importation cost, currency exchange rate loss and highest tax rates, only a few days after the PTI administration was ousted.

Shehbaz Sharif, the recently elected Prime Minister of Pakistan, must decide whether to suspend a four-month price freeze established by his former, Imran Khan, on 28th February.

With the next biweekly review, scheduled on Friday, high ranking sources in Ogra and the Petroleum Division revealed that the authority had offered the government two alternatives for price increases in the next biweekly review today.

However, according to sources, it is said that the freeze in petrol price will not be lifted and the prices will remain the same.

Both possibilities, according to Ogra, were being studied underneath the PTI administration’s policy guideline of August 24, 2020. This necessitated calculations using the prevailing sales tax and oil charge values at the point of the weekly review, as well as the maximum tax rates allowed by law.

According to Ogra’s recent paper, all items’ prices should rise in an Rs22-52 per litre bracket based on current tax rates to charge breakeven pricing without any subsidies.

The former price of HSD (high-speed diesel) under such an option has been calculated at Rs195.67 per litre, up from Rs144.15 before, a 35.7 per cent increase. From Rs149.86 per litre, the former price of petrol would jump by Rs21.60 (14.2%) to Rs171.46 per litre.
The same methodology predicts a kerosene price of Rs161.61 per litre, up Rs36.03 or 28.7% from the current price of Rs125.56. The former cost of LDO (light diesel oil) has been computed at Rs157.20 per litre, up from Rs118.31 now, indicating a 32.9 per cent rise.

The 2nd price statement suggests full tax rates, which include a 17 per cent GST on all items and an Rs30 per litre petroleum fee for HSD and petrol, accompanied by Rs12 on kerosene as well Rs10 on LDO.

The PTI administration had authorised slightly more than Rs31 billion in price differential claims payments to oil marketing corporations in March, but rather an amount of Rs34 billion for the first week of April has yet to be approved or allocated in the budget.

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