ISLAMABAD - The federal government on Friday reduced the prices of petroleum products by up to Rs5 per litre after rejecting the summary of Oil and Gas Regulatory Authority (Ogra) that recommended increasing the prices.

Finance Minister Asad Umar announced the government has decided to reduce the prices of petrol and diesel by Rs2 per litre. Similarly, price of kerosene oil has been decreased by Rs3 per litre, whereas light diesel price has been slashed by Rs5 per litre, the finance minister said at a press conference along with Federal Minister for Planning and Development Khusro Bakhtyar and Minister of State for Revenue Hammad Azhar.

The Ogra had recommended an increase of up to 11.46 percent in the prices of different petroleum products for the month of December, despite the recent 36 percent decrease in crude oil prices in the international market. The Ogra had suggested an increase of Rs6.15 per litre in motor spirit (petrol) price and Rs2 per litre in the price of high speed diesel (HSD). Similarly Ogra had also proposed Rs9.91 per litre increase in kerosene oil and Rs7.79 per litre in the price of light speed diesel.

The Ogra had recommended increase after enhancing the general sales tax (GST) and petroleum levy (PL) on the oil products. However, the PTI-led government has decided to reduce the petroleum products prices by not increasing the GST to the standard rate of 17 percent. The government has enhanced the GST on petrol to 8 percent for December as compared to 4.5 percent of November. Similarly, the GST on diesel has increased to 13 percent for December from 12 percent of November. Meanwhile, the government has enhanced the petroleum levy on diesel to 8 percent in December from 6.51 percent of November. It has also increased the PL to 10 percent on petrol for December from 6.15 percent.

The finance minister said that GST is still lower in December as compared to May 2017 when PML-N government was in power. Umar said that oil prices for December are determined on the basis of the current month’s (November) average prices. “The price is set when the ship [carrying fuel] starts moving from [its point of origin],” he said.

He informed the government had partially increased the oil prices for last month of November despite massive increase in its prices in international market. In October, oil prices were $84-85 in international market. “We thought this would be too much of an increase, so we raised the price only half as much as was recommended and had to decrease the sales tax and petroleum development levy.” Later, the prices in global market had reduced to $77 per barrel in mid-November and to $60 per barrel in end of November. “The oil prices will massively decrease in the country next month if it remained at $60 per barrel in international market.”

The new rate of petrol for December would be Rs95.83 per litre from Rs97.83 per litre for the ongoing month of December. New price of high speed diesel would be Rs110.94 per litre from Rs112.94. The prices of kerosene oil would go down from Rs86.50 per litre to 83.50 per litre and light speed diesel price will down from Rs82.44 per litre to Rs77.44 per litre.