On Tuesday, the government has increased the prices of high speed diesel and petrol by Rs1.52 and Rs1.71 per liter with immediate effect for the month of March. The prices are increased on the basis of presumed higher tax rate.
Finance Minister Ishaq Dar has made this announcement. During the press briefing he said that the government had passed on to consumers a partial increase recommended by the Oil and Gas Regulatory Authority (Ogra) and would absorb an additional Rs3 billion as it has not fully transferred the impact of higher international oil prices.
An official familiar with the scenario has said that OGRA has not followed legally notified rate in case of high speed diesel or HSD. If the regulator had applied 29.5 per cent rate of general sales tax (GST) then the price should have gone up by only 97 paisa per liter. The rate was notified by the Federal Board of Revenue (FBR).
Instead, the regulator had acted upon the ‘secret instructions’ issued by the finance ministry. The ministry instructed the petroleum ministry to apply 31pc GST while calculating HSD price build-up. As a result, the regulator provided the calculated price increase of Rs2.18 per liter for HSD which was revised by the PM and finance ministry and increase was set on 1.52 per liter.
Mr. Ishaq Dar has mentioned in the announcement, “In consultation with and on the directive of the prime minister, we have decided to increase petrol and HSD prices by Rs1.71 and Rs1.52 per liter, respectively”.