Oil prices linked to intentional market rates: govt spokesmanSeptember 2, 2013
Islamabad : The spokesman of the Ministry of Petroleum & Natural Resources has clarified that the domestic sale prices of petroleum products are linked with actual international market import prices of petroleum products imported by PSO during the immediate preceding month.
In case of no imports, the domestic sale prices are worked out as per Import Parity Pricing formula based on monthly average international market (Arab Gulf) prices of petroleum products published in Platts Oilgram.
The prices of petroleum products are deregulated and Oil Marketing Companies (OMCs)/Refineries have been authorized to fix and notify prices in accordance with the above GoP approved formula. OGRA monitor the prices notified by OMCs/Refineries to ensure that prices are as per formula and there is no overcharging. Ministry of Petroleum & Natural Resources notify the Petroleum Levy, if required, with the approval of Finance Division.
During the preceding month of August, 2013, the prices of most of the petroleum products and crude oil increased due to Middle East situation. Also Pak. Rupee depreciated by 2.5% against US $ during the month. Both the above factors impacted the import prices of petroleum products and thus the domestic sales prices increased.
It is worth mentioning that the GoP reduced its tax Petroleum Levy (PL) on High Speed Diesel (HSD) to reduce the increase on it from Rs.3.57 to Rs.2.50. Similarly PL on HSD w.e.f. 1.8.2013 was also reduced to provide relief of Rs.1.50 per litre to consumer.
It is worth mentioning that the current PL rates (Rs./Litre) on major petroleum products of public use i.e. petrol & HSD are less than the actual budgeted rates as given below:-
Petrol HSD (Diesel)
Budgeted: 10.00 8.00
Current Notified: 9.43 4.53
Estimated impact of the above reduced rates of PL on Petrol and HSD is collectively around Rs.2.8 billion per month which is loss of revenue to the Govt. against budgeted and thus subsidy to consumer.