'Transparent' petroleum pricing formula unveiled

Mon, 20 Jul 2009 00:00:00 +0600

ISLAMABAD - Advisor to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain has said that a transparent mechanism is in place to determine oil prices and that the government is not earning through hidden taxes on the petroleum products.
He maintained that the sale price of petrol stands at Rs 59.59 per litre, high speed diesel Rs 62.73 per litre and kerosene oil at Rs 56.94 per litre following the imposition of 16 per cent general tax on imported crude oil, adding that this pricing formula would be implemented from August 1, subject to stability in the prices of the imported oil.
Unveiling the petroleum products pricing formula here at a Press conference, Dr Asim Hussain said it was for the first time that pricing formula had been made public to keep the people abreast with the process for determining petroleum prices.
Under this formula, determination of ex-refinery prices depends on import price of crude oil, he added. The prevailing import price of petrol stood at Rs 33.95, high-speed diesel at Rs 36.05 and kerosene oil at Rs 36.72 per litre including consignment charges on crude oil, he pointed out.
The government had devised the methodology to restrict profits of oil marketing companies and dealers to a proper level. Under this method four per cent profit has been fixed for oil marketing companies on overall prices of petrol, high octane, kerosene oil and light diesel oil. In this way the minimum profit comes to Rs 1.09 per litre and maximum profit Rs 1.80 per litre. Profit at the rate of Rs 1.35 per litre had been fixed against high-speed diesel. The per litre profit for dealers on petrol and high octane had been fixed at the rate of five per cent, he indicated. This way minimum profit has been set Rs 1.36 per litre and maximum profit Rs 2.25 per litre, he added. Dealers would be able to earn profit at the rate of Rs 1.40 per litre on high-speed diesel. The government has imposed Petroleum Development Levy (PDL) after the determination of profit of oil marketing companies and dealers on the basis of ex-refinery price of petroleum products, he pointed out. PDL has been slapped at the rate of Rs 10 per litre on petrol, Rs 8 per litre on high-speed diesel, Rs 14 per litre on high octane, Rs 6 per litre on kerosene oil and Rs 3 per litre on light diesel oil.
He said prices of petrol were set at Rs 51.37 per litre inclusive of all profits and PDL, prices of high-speed diesel at Rs 54.08 per litre and prices of kerosene oil at Rs 49.10 per litre. After the imposition of 16 per cent general sales tax, sale price of petrol for consumers has been fixed at Rs 59.59 per litre, sale price of high-speed diesel Rs 62.73 per litre and sale price of kerosene oil Rs 56.94 per litre. These prices would stand implemented from August 1, subject to stability in the prices of crude oil in the international market, he held.
Responding to a question, he said the prices of petroleum products could be reduced considerably through imposition of sales tax on import price of crude oil instead of prices to be accrued after inclusion of all sorts of profits, PDL in the total prices of oil products. This proposal would be brought under consideration of federal cabinet after the decision of the Supreme Court in respect of the case pending hearing with it, he informed.
The Petroleum Advisor also maintained that Iran-Pakistan gas pipeline project was in the national interest adding completion of this project would help produce 4600 megawatt electricity and save $5 million per day. Therefore, delay in the completion of this project could leave negative impact on the national economy, he cautioned. �I appeal to all stakeholders to extend full cooperation to the government for immediate completion of this project by preferring national interest to their personal interest�, he concluded.
Monitoring Desk adds: According to BBC, the reduction in petrol price from August 1 will be Rs2.50 per litre and the diesel price will be increased by eight paisas per litre.

The Nation : Headline News

'Transparent' petroleum pricing formula unveiled