POL prices to jump up, thanks to budget

[LahoreEstate]

Monday, June 15, 2009

By Mehtab Haider

ISLAMABAD: The government has decided to implement an automatic adjustment formula to pass on the fluctuation in POL prices in the international market to consumers by adding the fixed carbon surcharge from July 1.

After introducing this new mechanism, there will be no need to move a summary to the prime minister for seeking any approval on the adjustment of oil prices. The prices of POL products will be adjusted either upward or downward keeping in view the price fluctuation in the international market.

The role of the Ministry of Finance in fixing prices of the POL products will be eliminated after putting in place the automatic adjustment formula.According to the Finance Bill 2009-10, the government has imposed Rs 8 per litre carbon surcharge on high-speed diesel, Rs 10 per litre on motor spirit, Rs 6 per litre on kerosene oil, Rs 3 per litre on light diesel oil, Rs 14 per litre on HOBC and Rs 6 per kg on the compressed natural gas (CNG).

“A new formula is being devised in order to determine the automatic adjustments in POL prices. Later, a summary will be moved to the federal cabinet for the approval of formula,î a senior official said while talking to The News in background discussions on the budget 2009-10 here on Sunday.

The POL prices will be adjusted on fortnightly basis exactly on the pattern prevailing in the international market. Everyone will be able to calculate the prices keeping in view the trends in the international market, said the official.

On power tariff, the official said that the government had fulfilled its commitment with the donors by not allocating any amount for power differential subsidy in the budget 2009-10. ìWe have allocated a few billion rupees in order to recover the backlog as the government has not yet passed on the 17 per cent hike in the power tariff to consumers,î said the official.

Meanwhile, Adviser to the PM on Finance Shaukat Tarin, when contacted, said on Sunday that the government wanted to put in place a transparent mechanism to determine the prices of POL products. “We do not want to hide anything and it will make a transparent mechanism,” he added.

Secretary Finance Salman Siddique told a selected group of reporters after the post-budget press conference on Sunday that the automatic fuel adjustment formula would be implemented from July 1.

He said that the government was currently working on devising the new formula, which would be made public very soon. Another senior official in the Finance Ministry told this scribe that the government had also committed with the IMF, the WB and the ADB in abolishing power differential subsidy from July 1. Under the action plan for the power sector, the power tariff determined by the Nepra would stand notified in 15 days if the government remained unable to notify it well on time, he added. A special surcharge would be levied to compensate losses of inefficient Discos (distribution companies), sources added.

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