The authority also announced a reduction in jet fuel prices, JP-1 price by Rs 5.21 per litre from Rs 88.65 per litre to Rs 83.44 per litre and JP-8 by Rs 5.21 per litre from Rs 88.32 per litre to Rs 83.11 per litre. The regulatory body recommended the government to cut the price of petrol by Rs 6.65, HSD by Rs 6.50, Kerosene Oil by Rs 5.15 and LDO by Rs 4.91. But the Ministry of Finance opposed OGRA's recommendations and directed the body to fix fuel prices accordingly.
An OGRA official, however, said the Finance Ministry was opposed to such a substantial reduction in prices. On April 1, the caretaker government reduced nominally the prices of petroleum products by Rs 1.60 to Rs 0.62 per litre, after the finance ministry increased the petroleum levy on all products. While on March 4, the out-going government of PPP de-notified an increase in the prices of petroleum products by absorbing Petroleum Levy (PL) according to which the petrol price was reduced by Rs 3.53 from Rs 106.60 per litre to Rs 103.70/litre, High Speed Diesel (HSD) decreased by Rs 4.35 from 114 per litre to 109.21, kerosene oil price cut by Rs 3.79 from 103.69 to Rs 99.90, and did not make any change in LDO price.
The PL was reduced on petrol from Rs 10 to Rs 6.47 per litre, while the levy on diesel was reduced from Rs 8 to Rs 3.65 per litre. On March 1, the petroleum prices were increased by an average of four per cent, but were subsequently restored to the February 28 level after three days.
Under the finance bill of 2012-13 approved as part of federal budget in June last year, the government can charge a maximum petroleum levy at the rate of Rs 10 per litre on petrol, Rs 14 on HOBC, Rs 6 on kerosene and Rs 8 on HSD. The oil marketing companies and petroleum dealers are entitled to marketing margin of up to Rs 3 per litre. In addition, the government also collects 16 per cent GST on all products. The levy brings windfall revenue for the government in case of price increase. The official said the finance ministry was insisting on restoring full petroleum levy on all products because its revenue estimates would be affected by a proportionate reduction in general sales tax on all products at 16 per cent.