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ISLAMABAD: The coalition government of Pakistan Muslim League-Nawaz (PML-N) has allowed a significant raise of nearly Rs20 per litre in the prices of petrol and high-speed diesel (HSD) with effect from August 1, 2023, owing to an increase in petroleum prices globally, Pakistan State Oil (PSO) exchange rate adjustment, and customs duty.

The Oil and Gas Regulatory Authority (OGRA) has recommended increasing the ex-depot price of petrol and HSD by Rs37 per litre for the first half of August based at Rs55 per litre petroleum levy (PL) on petrol and Rs50 PL on HSD. No general sales tax (GST) has been incorporated in the prices.

The Finance Division did not announce the fortnightly adjustment in the prices of petroleum products on Monday, as consultations continued till Tuesday morning.

Explaining the delay, Finance Minister Ishaq Dar on Tuesday said that the government had checked the recommendations of the OGRA until the late hours of the night. “The basic reason for the delay in the announcement was that we were looking at different ways to reduce the prices,” Dar said.

The finance minister announced an increase in the prices of petrol and HSD by Rs19.95 and Rs19.90 per litre, respectively. The price of petrol has soared to Rs272.95 per litre, while the HSD price reached at Rs273.40 per litre. This significant price surge is likely to hit the already burdened consumers hard.

The OGRA accepted and computed PSO’s $ 10.4 per barrel weighted average premium, Rs2.64 per litre adjustment, 35 paisa incidental, and Rs16.5 per litre customs and regulatory duty with effect from August 1. The average exchange rate in the last 15 days was recorded Rs285.5 against the US dollar.

The dealers’ commission has been fixed at Rs7 per litre and the Oil Marketing Companies (OMCs) margin is Rs6 per litre. The inland freight equalization margin (IFEM) has been declined by Rs1.36 per litre on HSD and fixed at Rs2.63 per litre on petrol. These are based on the provisional costs of PSO cargos completely discharged between July-16-31, whereas, the value of custom duty has been taken as communicated by OGRA. However, no HSD cargo was imported by PSO during the period.

Last week, the Oil Companies Advisory Council (OCAC) had written letters to the OGRA asking to raise the price of the HSD by Rs10 to Rs12 per litre for the first half of August as it faced massive losses due to higher import costs and lower domestic prices.

The minister said that the matter was then discussed with Prime Minister Shehbaz Sharif earlier today. He argued that there were commitments with the International Monetary Fund (IMF) regarding the petroleum levy, adding if there were no commitments they would have announced a smaller increase but everyone knew they had a standby agreement.

Copyright Business Recorder, 2023

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