The government, in line with the international price of petroleum products (POL), is likely to increase petrol prices by Rs 5 per litre, effective from January 1, 2012.

According to Petroleum Ministry officials, the Oil and Gas Regulatory Authority (Ogra), keeping in view the international prices of petroleum products, has recommended to the government to increase price of high octane oil (HOBC) by Rs 5 per litre, motor spirit (MS) by Rs 1.5 per litre, high speed diesel (HDO) by Rs 1.5 per litre, light speed diesel (LDO) by Rs 1.5-2 per litre. As per Ogra recommendations, there is no change expected in the price of kerosene oil.

On December 1, 2011 the government jacked up the price of important POL products: light speed diesel oil (LDO) by Rs 4.79 per litre, high speed diesel oil by Rs 4.79 per litre, kerosene oil by Rs 3.48 per litre and petrol by Rs 0.55 per litre.

Ogra had recommended to the government not to increase petrol and diesel prices, but the Finance Ministry increased petrol price by Rs 0.55 per litre and kerosene oil by Rs 3.48 per litre.

The increase in the petroleum products prices would further increase the prices of the food basket (food inflation is already in double digits in the country) due to a consequent increase in transportation cost.

Currently, different petroleum products are being sold at following prices: HOBC at Rs 106.72 per litre, premium at Rs at Rs 87.69 per litre, HDO at Rs 98.83 per litre, LDO at Rs 86.78 per litre and Kerosene at Rs 89.24 per litre.

After the expected increase in petroleum prices from January 1, 2012 petroleum products would be sold at following prices: HOBC 111.72 per litre, MS 89.17 per litre, HSDO at Rs 100.33 per litre, LDO at Rs 87.28 per litre and kerosene would be sold at old rates of Rs 89.24 per litre, if the Finance Ministry and Petroleum Ministry did not make any amendments.

According to Ogra sources, it had recommended to the government not to increase the price of diesel, or petrol, to adjust inland freight margin, but the government while ignoring the recommendations of the Authority increased diesel and petrol prices by Rs 3.48 per litre and Rs 0.55 per litre respectively.