Just a month after Ogra dropped the petrol bombs on the nation, the media at large seems to be on a holiday as the most recent Ogra notification failed to get the same column space and air time in the print and electronic media respectively. And the reason for that is simple, because Ogra was not allowed to notify the prescribed increase it sought as the Prime Minster ordered the prices to remain unchanged.
Surely, it must have been a dampener for the TV channels and a lot of newspapers alike, as a 4~5 percent increase in petroleum product prices was widely tipped in the media and amongst experts. The TV vans stationed at various petrol pumps must have had to return empty-handed after the government decided not to pass on the impact of the global crude oil price increase to the already burdened customers.
It is a pity that this decision from the government was not lauded in the media and will die down, unnoticed. Agreed that the step seems to be more out of desperation than any other thing, but it does indicate that the government is not completely ignorant of the publics woes.
On the more technical side, since the government has chosen to forgo a portion of the controversial Petroleum Levy (PL) in order to provide temporary relief to the consumers, it carries the potential to disturb the tax revenue collection if the practice persists.
Mind you, the Rs110 billion PL collection target already seems a bit optimistic as the sales of petroleum products took a sizeable dip during and after the floods. If it remains a one-time measure and the oil prices cool down from the current levels, a loss of nearly Rs700~800 million would not be that significant.
But the global oil prices do carry an upside risk according to EIAs latest price forecast, which predicts global oil to stay above $85/bbl in the near-term. It will be tricky for the government to shed more of its revenue share if that happens, unless the inflation at other fronts tapers off.
Besides the relief provided from the PL, the media - especially the local electronic media - should also take note of the fixing of OMC and dealers margins in absolute terms, which has led to a sizeable decline in the final product price. The OMC and dealer margins, which used to be 4 and 5 percent respectively just a month ago, currently stand around 3 and 3.8 percent at the current ex-refinery price.
In simpler terms, had the margins not been fixed in absolute terms, the consumers would have been paying an extra 2 percent on petrol. As minimal as it may be, pat the governments back when it deserves one.
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Rs/ltr Previous margins Absloute margins
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Ex-refinery 45.15 45.15
PL 10.00 10.00
IFEM 3.84 3.84
OMC amrgin 1.50 1.96
Dealer argin 1.87 2.45
GST 10.60 10.78
Retail price 72.96 74.18
Benefit 2%
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Source: Ogra