New Year ‘gift’: Petrol prices increased by Rs2:31 per litre

New Year ‘gift’: Petrol prices increased by Rs2:31 per litre

The federal government on Thursday notified an increase of up to 5.8% in the prices of all petroleum products for the first half of January 2021.

The Oil and Gas Regulatory Authority (OGRA) had recommended an increase of Rs10.68 per litre in the price of petrol but the government has approved a hike of Rs2.31 per litre.

The new petrol price has gone up by 2.2% to Rs106 per litre from Rs103.69 per litre.

The government also approved an increase of Rs1.80 per litre in the price of high-speed diesel (HSD) as against the regulator suggestion of Rs8.37 per litre. The new rate of HSD is up by 1.6% to Rs110.24 per litre from the earlier Rs108.44 per litre.

The price of kerosene oil has been increased by Rs3.36 per litre or 4.7% to Rs73.65 per litre from Rs70.29 per litre, the notification stated.

Orga had further sought a Rs14.87 per litre hike in the price of light diesel oil (LDO) but the government increased the price of Rs3.95 per litre. The new rate of LDO has been increased by 5.8% to Rs71.81 per litre from Rs67.86 per litre.

A massive increase of Rs16 per kilo was witnessed in the price of liquefied petroleum gas (LPG) with effect from January 1. The new rates of LPG after the increase will be Rs148 per kilo as against Rs132 per kilo.

The government is currently charging a standard rate of 17pc general sales tax (GST) across the board to generate additional revenues while petroleum levy is slightly lower than the maximum permissible limit.

Over the last few months, the government has been increasing petroleum levy rates instead of GST as levy remains in the federal kitty while GST goes to the divisible pool taxes and thus about 57pc share is grabbed by the provinces.

Petrol and HSD are two major products that generate most of the revenue for the government because of their massive and yet growing consumption in the country. Average petrol sales are touching 700,000 tonnes per month against the monthly consumption of around 600,000 tonnes of HSD. The sales of kerosene oil and LDO are generally less than 11,000 and 2,000 tonnes per month, respectively.