2008 to 2013: average fuel price rose by 100 percent

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The average fuel price rose by 100 percent from 2008 to 2013. Petrol prices registered an increase of Rs 40.50 per litre as in 2008 petrol was selling at Rs 62.80 per litre against Rs 103.70 per litre current price. High Speed Diesel witnessed an increase of Rs 70.71 per litre with the commodity selling at Rs 38.50 per litre in 2008 against current price of Rs 109.21 per litre. High Octane Blending Component (HOBC) witnessed an increase of Rs 61.38 per litre which currently is selling at Rs 136 per litre against Rs 74.77 in 2008. Compressed Natural Gas (CNG) tariff increased by Rs 39, which currently is available at Rs 74.50 per kg against Rs 35.50 per kg in 2008. Similarly the price of Kerosene Oil (KO) during the past five years witnessed an increase of Rs 58.46 per litre. The commodity at present is selling at Rs 99.90 per litre against Rs 41.44 in 2008, Light Diesel Oil (LDO) price increased by Rs 59.48 per litre to Rs 94.98 per litre from Rs 35.50 per litre.

The increase in the fuel prices could be attributed to depreciation of PKR against the dollar as in 2008 a dollar was available at Rs 62 which at present is hovering a little over Rs 99. Pakistan requires imports of over 75 percent of petroleum products.

The government's tax on petroleum and POL products at present is as follows: Rs 10 per litre Petroleum Levy (PL) on petrol, Rs 8 per litre on HSD, Rs 14 per litre on HOBC, Rs 6 per litre on kerosene oil and Rs 3 per litre PL on LDO in addition to the 16 percent GST on all petroleum products. The government during the past five years increased gas tariff for all the sectors of economy. On January 1, 2012 for domestic, commercial, cement industry, for Water and Power Development Authority (Wapda) and Karachi Electricity Supply Company (KESC) by 13.98 percent and for industrial sector by 16.95 percent.

The analysis shows that this massive oil/gas price hike applicable on domestic as well as on industrial sectors and the CNG sector has resulted in a significant increase in inflation as transportation costs since 2008 increased manifold. The increase in gas price also increased the cost of production of the industrial sector, besides pushing up prices of essential commodities. As per official sources Pakistan was facing a serious energy shortage issue in the long-term as decline in gas production is a serious threat to energy security and if no action is taken the current production of around 4.3 Billion Cubic Feet of gas per Day (BCFD) will decline sharply to around 2.5 BCFD by 2020 and 400 mmcfd by 2030.

According to a comparison of the cost of gas for different consumers, the general industry pays the cost of natural gas at 25 per cent of furnace oil price, cement plants at 35 per cent of furnace oil price, fertiliser feedstock at 7 per cent of oil price, gas used as fuel in fertiliser manufacturing at 25 per cent of oil price and power companies at 25 per cent of oil price. To bridge this gap the government in 2011 decided to impose Gas Infrastructure Development Surcharge (GIDS) on five sectors excluding domestic and commercial sectors. For fertiliser sector under GIDS gas tariff was increased by Rs 197 per Million British Thermal Unit (MMBTU), industrial sector by Rs 100 per MMBTU (which later was reduced to Rs 50 per MMBTU), Karachi Electricity Supply Company (KESC) by Rs 27 per MMBTU and Independent Power Plants (IPPs) running on gas by Rs 70 per MMBTU, the official maintained.

Courtesy: Business Recorder


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