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Ogra proposes increase in fuel prices by up to Rs120 per litre

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April 14, 2022 (MLN): In a summary to the government, the Oil and Gas Regulatory Authority (Ogra) has recommended the government to increase fuel prices by up to Rs83 per liter, a press release on Friday showed.

The fuel price regulator has recommended the government two options i) to reduce sales tax and incidence of petroleum levy to zero and ii) to impose 17% sales tax and Rs30 petroleum levy on the per liter prices.

On the basis of first summary, the diesel price will likely to go up by Rs51.52 to Rs195.67; petrol by Rs21.30 to Rs171.16; Kerosene by Rs36.05 to Rs161.61 and light Diesel by Rs38.89 to Rs157.20.

Meanwhile, Ogra, in its second summary, the diesel price will likely to go up Rs119.88 to Rs264.03; petrol price to up by Rs83.50 to Rs235.36; Kerosene by Rs77.56 to Rs203.12 and light Diesel up by Rs77.31 to Rs195.62.

The exorbitant increase proposed by the regulator is mainly on account of the pent up increase stalled by the previous government. To note, PM Khan led government had decided to freeze the fuel prices from March 1 onwards after reducing the per liter prices of petrol and diesel by Rs10.

The government justified the move claiming that the move was meant to help the masses during the high inflationary period.

Fiscal policy analysts argued the move would cause unnecessary burden on the government and would increase government’s import bill as artificially keeping prices low will further increase demand.

The new government has found itself in a tricky spot as it tries to navigate on fuel prices as it is faced with a decision to take a widely unpopular move to increase fuel prices.

An increase of the quantum proposed by Ogra in either of the summaries will sharply increase inflation for the month of April and will likely push it beyond the 15%YoY mark.

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