Govt ignores POL pricing formulae

The government disregarded the normal pricing algorithms to impose substantial charges and premiums on consumers as it jacked up rates of petrol and high speed diesel (HSD) by Rs27 on Friday.

Sources in the Oil and Gas Regulatory Authority (Ogra) said under the normal pricing formula petrol prices were not to be increased.

But the government slapped a huge Petroleum Levy of Rs26.77 per litre on petrol. This new increase of about Rs27 raised the total charge on petrol to a whopping Rs107 per litre, up from Rs80.

Likewise, HSD clients were denied any possible redress. According to the content of the official notification, diesel prices were to be decreased.

Instead, the government added Rs26.77 a litre to the price. Sources stated this specific spike in fuel prices was done to help out Pakistan State Oil (PSO) on premium payments.

This abrupt and unanticipated action rocked the sector.

Sources said the move of the government took the oil marketing companies (OMCs) by surprise with them expressing surprise over the uncalculated price hikes.

Prime Minister Shehbaz Sharif on Friday jacked up prices of both HSD and petrol by Rs27 per litre despite the fact that no increase was required in the rates of petrol and to drive its price higher the premier slapped almost Rs27 per litre extra tax on fuel.

HSD price was fixed at Rs380.2 per litre as against Rs353.42 per litre. That was up 7.5%. Diesel prices remained substantially below the record high of Rs520.4 on April 10. HSD is the most inflationary fuel as it is widely used in the transportation and agriculture industries.

Prime Minister approved to raise petrol price to Rs393.4 per litre from Rs366.6. This is an increase of 7.3% over present prices. Officials of Petroleum Division stated there was no change in the petrol prices in the international market and the rates had to be jacked up due to an increase in the tax.

Meanwhile, the government gave historic relief to consumers of paraffin oil by reducing the price of the fuel by Rs63.60 a litre.

After this big cut, the revised price of kerosene oil has been adjusted at Rs 365.21 per litre. It is the second successive week of big comfort to paraffin consumers after a Rs21.34 per litre price cut was announced just last week.