Prices of petrol and CNG reduced

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ISLAMABAD: The government nominally reduced on Sunday prices of all petroleum products and CNG for a week in line with a decline in prices in the international market.

The price of petrol has been reduced by Rs2.33 to Rs101.07 per litre. In line with a decision to keep the CNG price at 40 per cent less than that of petrol, it was cut by Rs2.12 to Rs92.53 per kg for Zone-I comprising Balochistan, Khyber Pakhtunkhwa and Potohar and by Rs1.94 to Rs84.54 for Zone-II comprising Sindh and Punjab.

The price of kerosene was reduced by 61 paisa to Rs103.22 per litre and that of light diesel oil (LDO) by 25 paisa to Rs97.68 per litre. The price of high speed diesel (HSD) — mostly used by heavy vehicles, electricity generators and agricultural tubewells — was decreased by 33 paisa to Rs113.29 per litre. Over and above the landed cost of imported products and commission of retailers and oil marketing companies, the government is charging a maximum petroleum levy permissible under the Finance Bill at the rate of Rs10 per litre on petrol, Rs14 on HOBC, Rs6 on kerosene and Rs8 on HSD. In addition, the government collects 16 per cent GST on all products.

 

LEGAL COMPLICATIONS: With non-implementation of the National Assembly’s unanimous resolution seeking monthly, instead of weekly, pricing of oil and CNG and the Supreme Court taking cognizance of the issue, the Oil and Gas Regulatory Authority (Ogra) has flagged a new legal discrepancy and asked the government to rectify it at the earliest.

In a policy note to the Ministry of Petroleum and Natural Resources, Ogra did not mention the apex court taking notice of the overall oil pricing system, but pointed out that CNG pricing could create legal complications and hence its prices should either be reduced substantially or it be given a legal cover. It said that on the advice of the government, Ogra had been scaling up gas infrastructure development cess (GIDC) on CNG and then directly increasing the cost of gas for CNG to maintain its price 40 per cent less than petrol.

An official told Dawn that both the instruments had now lost legal standing and the matter could be raised in the apex court anytime. He said the GIDC on CNG had already exceeded the maximum limit permitted by parliament. Under the GIDC rates approved by parliament to raise revenue for construction of pipelines and infrastructure development, the government could not charge more than Rs300 per mmbtu (million British Thermal Unit) on CNG for Zone-I and Rs200 for Zone-II.

While the GIDC at Rs300 per mmbtu for Zone-I is within the permissible limit, its rate for Zone-II is in excess of Rs260 per mmbtu, well above the legally protected maximum rate of Rs200. Ogra’s legal department also pointed out that a direct increase in the cost of gas for CNG being made for a couple of months was a serious issue and in fact violated the Ogra Act. According to officials, the Ogra law envisages that a change in the price of gas for any sector can be made only twice a year through review of well-head prices, followed by a public hearing to determine the prescribed and then consumer prices. The cost of gas for CNG determined by Ogra through this process was fixed at Rs618.33 per mmbtu in July. On the basis of petroleum ministry’s advice, Ogra was increasing the CNG price on a monthly basis which crossed Rs729.19 per mmbtu on October 15.

Ogra’s legal advisers are of the opinion that even though the CNG price has been reduced to Rs700.50 per mmbtu on Sunday, this monthly adjustment was questionable. Before the price review, Ogra advised the government to do away with these discrepancies by reducing the CNG price even though the 40 per cent discount on CNG over petrol might increase to 50 per cent. But the government did not accept the recommendation and asked Ogra to keep the price differential at 40 per cent.

 

 

Courtesy: Dawn


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