The Oil Companies Advisory Committee (OCAC) and oil marketing companies have raised petroleum product prices by maximum 7 percent, starting from December 16, to meet revenue shortfall from oil tax collection. A statement, issued on Wednesday following OCAC's fortnightly meeting to review the prices of petroleum products, said: "In order to shield the consumers in general and low-income segments in particular from the unprecedented increase in international price of oil the Government of Pakistan had frozen the domestic prices of petroleum products from May 1, 2004.

"In doing so, it has taken so far a budgetary hit of Rs 33 billion. This not only includes the loss to the Petroleum Development Levy but also a further subsidy on account of price differential claims of the oil marketing companies and oil refineries.

"It is to be noted that if price had been adjusted in accordance with the international oil prices, the domestic prices of petrol and diesel would have been Rs 40.63 per litre and Rs 32.29 per litre respectively, ie 10 percent and 32.5 percent higher than the current prevailing prices.

"Though the international price of petroleum products has eased a little bit since its peak in October 2004, it nevertheless remains substantially higher than May 2004 prices. Recent information including the statement from Opec ministers indicate that oil prices would continue to remain firm in the months to come. The government stated that fiscal prudence demands that we review the policy in order to protect not only the federal budget 2004-05 but also the development budget, which has a far reaching beneficial impact for the economy as well as for the people.

"Last week, minister for state petroleum and natural resources said that the government won't raised the oil prices for six months, ending June 30, 2005.

"It is in this perspective that the government has decided to pass on a small fraction of the additional cost to the general consumer, effective December 16, 2004. This measure, the government feels, would have a marginal impact on the consumer as well as the economy. The government will however, continue to absorb substantial cost."

Pakistan State Oil Ltd and Shell Pakistan have raised the HSD price by 6.5 percent to Rs 25.96 per litre.

The OCAC has notified the revised maximum ex-depot sales price at 29 designated locations effective December 16, 2004 as under in rupees per litre:

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Product                 New          Old       Increase

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Motor Spirit          Rs 39.50     Rs 36.92     Rs 2.58

High Octane           Rs 43.73     Rs 40.87     Rs 2.86

Kerosene              Rs 25.50     Rs 24.00     Rs 1.50

Light diesel          Rs 22.41     Rs 21.05     Rs 1.36

High Speed diesel     Rs 25.96     Rs 24.37     Rs 1.59

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Copyright Business Recorder, 2004