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Government hikes prices of petrol and diesel by 1 rupee

ISLAMABAD: Finance Minister Ishaq Dar announced one rupee hikes in the prices of petrol and diesel during a press conference on Friday.

The finance minister announced the hike in the prices of both the petrol and diesel by Rs. 1. However, kerosene oil price remained the same. New prices will come into effect after 12 am tonight.

The summary moved by the OGRA had recommended price hikes of Rs. 2 per liter, but the government hiked the prices by Rs. 1 per liter.

Earlier, a summary was sent by the Oil and Gas Regulatory Authority (OGRA) to the government, in which it was being recommended a 2.74 percent increase in the price of High-Speed Diesel (HSD), 2.44 percent in petrol, 29.6 percent in kerosene and 17.6 percent of Light Diesel Oil (LDO).

According to the recommended percentage, there would have been an increment of Rs. 2 per liter of petrol, resulting Rs. 75 a liter. Also the High Speed Diesel (HSD) would have to be hiked to Rs. 84 a liter. OGRA had also recommended Rs. 13 per liter increment in the prices of Kerosene oil, and Rs. 7.75 per liter increase in the price of LDO.

The general sales tax rate as described by the Federal Board of Revenue was 30 percent for HSD, but OGRA had applied 31 percent rate of general sales tax. Finance ministry did not take in to account the recommended general sales tax rate and applied higher GST rate. Regulator adopted 31 percent GST to calculate HSD prices for the fourth time consecutively. This rate stood legally eliminated on Dec 31, 2016.

Finance ministry gave instructions to apply 31 percent GST to calculate the prices of HSD. The regulator calculated Rs. 2.18 per liter increase in the price HSD, but Prime Minister and Finance Minister hiked the prices of HSD to Rs. 1.52 per liter only.

Due to the massive consumption in the country, petrol and diesel are major revenue generating sources for government.