ISLAMABAD: The government increased on Wednesday the prices of petrolandhighspeed diesel (HSD) by Re1 per litre each with immediate effect.

The announcement was made by Finance Minister Ishaq Dar, who also said the government had not passed on fully to consumers the price increase recommended by the Oil and Gas Regulatory Authority (Ogra) and decided to absorb an additional Rs3 billion by not fully transferring to them the full impact of price hike in the international market.

According to some analysts, however, this is not the whole truth.

A few days ago, the finance ministry asked the petroleum ministry to incorporate higher rate of generalsales taxandfullpetroleum development levy (PDL) while calculating the fortnightly price changes.

The order was passed on to Ogra, which made the changes without looking into the legalities involved.

For the purpose of price calculations for petrol, light diesel oil (LDO) and kerosene a standard GST rate of 17 per cent was used but for HSD a rate of 31pc was strangelyused.

Had Ogra calculated the HSD price on the basis of notified GST rate of 28pc, there would have been no need for increasing its price, said a ministry official.

The order issued by the finance minister`s office had said: `In future, kindly provide the working for Adjustment of Prices of Petroleum Products based on the Full PDL and Full GST for all petroleum products except GST on HSD. For HSD, the applicable GST rate should be incorporated in the working as notified in December 2016 for adjustment of prices of petroleum products which was 31 per cent applicable till 31st December 2016.

The ministry official said that Ogra did not ask the high-ups as to how could it use a GST rate of 31pc for HSD when the FBR`s notified rate for it was 28pc.

When contacted, an Ograspokesperson said the oil prices were deregulated years ago and the authority was just computing product prices for the purpose of verification because the actual calculations were made by oil companies. He said the regulator was simply following finance ministry`s orders in calculating various rates.

Mr Dar said on Wednesday the prices of other petroleum products were kept unchanged even though the petroleum ministry and its subordinate Ogra had recommended increase in their prices.

The ministry and Ogra had recommended an increase of Rs1.91 per litre in the price of petrol, Rs2.03 in the price of HSD, Rs16.7 in the price of kerosene and Rs12.5 in the price of LDO with effect from Feb 16, the minister said.

However, `on the directive of the prime minister we have decided to increase petrol and HSD prices by Re1 per litre,` he said.

Thus, the ex-depot price of petrol was increase d by 1.4pc to Rs71.29 from Rs70.29 perlitre while the ex-depot price of HSD went up by 1.26pc to Rs80.48 per litre from Rs79.48.

In line with the prime minister`s directive to provide maximum relief to the common people and keeping in view that kerosene and LDO were used by the low-income segments of the population, the prices of these two products had not been changed, Mr Dar said.

The prices of kerosene and LDO would, therefore, be Rs43.25 and Rs43.34 per litre, respectively.

The minister added that the government had largely 1(ept the prices of petroleum products stable since April last year except for some increase in December and January even though prices in the international market had gone up by about 43pc.

Petrol and HSD are the major revenue-generating oil products with HSD sales across the country now going beyond 800,000 tonnes per month against a monthly consumption of around 700,000 tonnes for petrol