Rs two per litre increase in oil prices likely

[Lahore_Real_Estate]

ZAFAR BHUTTA
ISLAMABAD (August 24 2010): The government is expected to increase oil prices by 2 percent in line with hike in global oil prices effective from September 1, 2010. Sources revealed to the Business Recorder that the average impact of an increase in global oil prices would account for one to two percent rise domestically or up to Rs 2 per litre.

"The average price of crude oil rose to $78 per barrel in the current month which stood at $76 per barrel during July," market sources said. The government reduced prices of petroleum products ranging between 21 paisa and Rs 1.24 per litre in August. But the price of high speed diesel (HSD) was raised by Rs 1.45. The current prices of petroleum products are as follows: petrol at Rs 67.74 per litre, HOBC at Rs 80.34, HSD at Rs 73.03, LDO at Rs 61.35, kerosene at Rs 64.85, JP-1 at Rs 54.76, JP-4 at Rs 50.22 and JP-8 at Rs 54.46 per litre.

Sources said that due to floods the consumption of petroleum products had declined for the short term but added that demand for petroleum products will rise after the restoration of the road infrastructure. Sources maintained that Parco refinery was supplying fuel products from its stocks and would start full operations after restoration of road access.

After expected increase in oil prices, government revenue collection on petroleum products on account of General Sales Tax (GST) will also increase. Government is currently collecting Rs 9.84 per litre GST on petrol, Rs 11.67 per litre on HOBC, Rs 9.42 per litre on kerosene oil and Rs 8.91 per litre GST on LDO. However, despite possible increase in oil prices, government will continue charging the existing rate of Petroleum Levy on POL products, which are as follows: petrol at Rs 10 per litre, HOBC at Rs 14 per litre, kerosene oil at Rs 6 per litre and LDO at Rs 3 per litre.