Petrol price to be reduced by Rs 5 * Diesel prices to remain unchanged

[LRE]

Petrol price to be reduced by Rs 5

* Diesel prices to remain unchanged

By Zafar Bhutta

ISLAMABAD: The government is likely to reduce the price of petrol by Rs 5 a litre from September 15, following a global decline in oil prices.

Sources familiar with the development said prices of diesel and other petroleum products will remain unchanged because the government is already subsidising diesel and kerosene oil.

The government had increased the petroleum development levy (PDL) instead of passing on the global downward trend in oil prices to consumers. In a notice issued by the Oil and Gas Regulatory Authority (OGRA) on August 15, the government announced an increase in PDL from Rs 5.49 per litre to Rs 19.53 per litre on petrol and from Rs 7.82 per litre to Rs 20.73 per litre on HOBC.

The sources said the government was currently recovering Rs 19.65 per litre in PDL on the petrol that had been exempted from the tax when oil prices in the international market shot up to over $145 a barrel. The tax is being adjusted as cross-subsidy on diesel and kerosene oil, they said. The government claims it pays a subsidy of more than Rs 12 per litre on diesel and cannot reduce diesel prices until the subsidy is gradually ended.

Officials had told Daily Times last month the government was however charging a general sales tax of Rs 8.05 per litre on kerosene oil and Rs 7.79 per litre on light diesel.

A report by the Online news agency said the decision to reduce oil prices was made in a meeting between the prime minister and the federal cabinet. The petroleum sector is a major source of revenue for the government where consumers have no lobbying power. The sources said that the PDL was originally intended to provide investment funds for the development of the oil sector, but the government has been using it to bridge the budget deficit.

http://www.dailytimes.com.pk/default.asp...2008_pg7_1