Oil price hike reversed, notification issued


ISLAMABAD: After three days of quibbling, the government on Sunday formally issued a notification to reverse its decision to increase prices of petroleum products from March 1.

“With effect from Sunday midnight, the petroleum prices have reverted to Feb 28 level,” prime minister’s adviser on petroleum and natural resources Dr Asim Hussain told Dawn.

As a result, the per litre ex-depot price of petrol is Rs103.07, that of high speed diesel Rs109.21, kerosene Rs99.90 and light diesel oil Rs94.33.

The notification for price reduction came after oil marketing companies had already sold over 62,000 tons of HSD in three days at the higher rate of about Rs114 per litre. Monthly consumption of HSD usually stands at 620,000 tons. Likewise, about 24,000 tons of petrol had been sold at about Rs107 per litre. The finance ministry earned about Rs500 million in three days.

After protests and walkouts in the National Assembly and criticism by parliamentarians of PPP and other parties, Prime Minister Raja Pervez Ashraf directed Finance Minister Saleem H. Mandviwalla to withdraw the increase.

This was not expected to happen automatically. Oil marketing companies did not take the prime minister’s statement seriously and kept on selling products at the increased rates on Saturday and Sunday amid confusion created in the absence of a government notification. The ministries of petroleum and finance blamed each other for the confusion.“We cannot change prices unless we receive notification from the (marketing) company or the government,” said a petroleum dealer in Islamabad when asked why products were being sold at higher rates despite an announcement by the prime minister. He said the company was waiting for the government notification and dealers had to follow the company’s notified rates.

Relevant teams at the Ministry of Petroleum and Oil and Gas Regulatory Authority (Ogra) were on ‘standby’ for two days — Saturday and Sunday — to issue notification about price reduction immediately after receiving a circular from the Finance Ministry.

A senior official said the finance minister who had received verbal instructions from the prime minister did not leave a note or pass on instructions to his ministry how to implement the directive. An SMS issued by Mr Mandviwalla’s media section on Sunday said: “Please note that prices of above (petroleum products) mentioned are controlled and managed by the ministry of petroleum and Ogra. Finance Minister has nothing to do with it.”

Mr Mandviwalla and finance ministry’s spokesman Rana Asad Amin were not available on phone for comment.

Prime minister’s adviser on petroleum Dr Asim Hussain said his team and Ogra had been waiting for the Finance Ministry’s advice to notify price reduction. He said he had also sent a summary to the Finance Ministry to reduce petroleum levy on petroleum products. “We can issue notification in no time after Finance Ministry’s approval,” he added.

Mr Hussain said there were only two methods of reducing prices, either through reduction in petroleum levy or providing petroleum differential claim (PDC) to oil marketing companies. In both cases, the price reduction involved subsidy on which the Finance Ministry had to take a decision. “Once the Finance Ministry takes a decision on subsidy, we can make adjustment in prices and pass on the notification to marketing companies in a minute”, he said, adding that since the formula for oil pricing that was based on international oil prices had not been changed, the petroleum ministry or Ogra could not do anything except to wait for Finance Ministry’s advice.

An Ogra official said the regulator had strongly recommended to the government not to increase the prices on Feb 28 but its advice was ignored.

The prices were restored to Feb 28 level by reducing the petroleum levy on petrol from Rs10 per litre to Rs6.47 while the levy on diesel was brought down from Rs8 to Rs3.65 per litre. The revised prices would remain in place till April 1.


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