On Friday, Oil and Gas Regulatory Authority (OGRA) proposed a price hike in the per litre cost of petrol and high-speed diesel.
According to the proposed bill, the authorities have suggested an increase of Rs. 83.5 per litre on petrol and Rs. 119 on the per liter cost of diesel. If the proposed bill is accepted, the price of diesel will surpass Rs. 250 per litre and the per liter cost of petrol would cross Rs. 200 petrol for the first time in history.
The Oil and Gas Regulatory Authority has sent a summary to the relevant authorities and has suggested enforcing the changes by April 16. It is important to note that the price of petrol and diesel are reviewed fortnightly.
According to sources privy to the matter, the suggested price hike was made on the basis of full levy and taxes – 70 percent GST and Rs. 30 levy on per liter cost of the commodity – and not the prevalent rates. For the two commodities, the current levy stands at Rs. 30 per litre, and approximately 17 percent GST is charged on it.
It is pertinent to mention that OGRA always depicts two options while submitting a proposal for a change in the price of any commodity; one with the full taxes and the other with the prevalent taxes.
It was learnt that the price increase suggested by the authority according to the prevalent taxes was Rs. 21.5 per liter on petrol and Rs. 51.3 per liter on diesel.
At prevalent taxes the rate increase OGRA has asked for is Rs 21/litre in Petrol and Rs 51/litre in Diesel. This is the differential that PTI govt was subsidising effectively to provide relief to the masses. 1/2
— Hammad Azhar (@Hammad_Azhar) April 14, 2022
Taking note of the suggested price difference between the prevalent and full tax rates, Former Minister for Energy Hammad Azhar took to Twitter and said, “This is the differential that the PTI govt was subsidizing effectively to provide relief to the masses.” He further hoped that the incumbent would not disturb the price differential mechanisms built by the PTI government to provide relief to the masses.
Analysts believe that the incumbent government would be forced to increase petrol and diesel price under the agreement with the International Monetary Fund (IMF), especially after former Prime Minister Imran Khan on 1 March slashed Rs. 10/liter off the prices in petrol and diesel.
Shortly after the decision to cut Rs.10 on petrol prices, the IMF review committee slammed the government’s decision and expressed its dissatisfaction with the government’s implementation of its commitments. It further inquired the government how it would fund the $1.5 billion subsidy announced by the Prime Minister.
Read more: PM Khan slashes petrol, electricity prices
Pakistan went to the IMF in 2019, and under the agreement, Pakistan is to receive about US$6 billion for a period of 39 months, and so far, it has received almost half it.
The IMF program is scheduled to end in September.