ISLAMABAD: As global oil prices continue to fluctuate, domestic retail prices of petrol may come down by as much as 3% if the price cuts proposed by the Oil and Gas Regulatory Authority are approved by Prime Minister Nawaz Sharif.
Sources in the petroleum ministry said that they have received Ogra’s proposal for retail price reductions for petrol and diesel, though the proposals are subject to final approval by the prime minister and may run into opposition from the finance ministry. Over the past several months, Finance Minister Ishaq Dar has frequently resisted allowing prices to drop, and frequently proposes temporary tax hikes as a means of keeping prices steady but increasing government revenues.
Over 25% of government revenues come from the energy sector, and much of that comes from oil. As oil prices began declining late last year, the government saw a precipitous drop in its revenues from the taxes on oil, resulting in the fiscal deficit becoming wider.
If Ogra’s proposal were to go through, petrol prices would go down by Rs2.69 per litre, or 3%, to Rs75.10 per litre. High-speed diesel, used mainly by the transportation industry and farmers, would see its prices decline by Rs5.48 per litre, or 6%, to Rs81.63 per litre. Light diesel oil, an industrial fuel, would see its prices drop by Rs6.33 per litre, or 10% to Rs55.18 per litre.
The prices of High-Octane Blended Component (HOBC), a fuel for luxury cars, would see its prices decline by Re1, or just over 1%, to Rs82.81 per litre. Kerosene oil, a fuel used for cooking and lighting by the poorest parts of Pakistan, would see its prices decline by Rs6.33 per litre, or just under 10%, to Rs58.61 per litre.
The final decision on oil prices is expected to be taken by the Prime Minister on Friday. After a summer of severe power outages, the PM may well take the opportunity to offer lower prices on one of the most widely used commodities.
However, given the sustained pressure on international oil prices, with the recent deal between the US and Iran on nuclear matter pushing prices even further down, the government may decide that the opportunity to keep its revenues from oil taxes may be narrowing.