ISLAMABAD, Feb 28: The federal government on Monday increased petroleum prices by up to 4.3 per cent with immediate effect saying it could no more sustain the revenue loss that has started affecting development programme.

Petroleum Minister Amanullah Khan Jadoon told a news conference that he had personally opposed the capping of petroleum prices in the first place because a natural behaviour of prices should have been followed. The price freeze in the early part of the year resulted in revenue loss of about Rs40 billion and was now adversely affecting development programme, he said.

He claimed that revision in prices of various petroleum products has been made by the Oil Companies Advisory Committee (OCAC) as per approved formula, but the government has now decided to announce prices changes.

The minister did not say as to why the dealers' commission and companies' margin was calculated on the basis of sale price of petroleum price, which also included the general sales tax but said a parliamentary committee was currently engaged in improving the mechanism to make it more transparent.

He said the government was pursuing the committee to have an early report to remove lacunas in the pricing formula but it was up to the committee members how quickly they submitted the report.

He also did not have explanation when asked why the government was unable to contain the profits of oil companies ranging between 170 per cent and 260 per cent. But secretary petroleum Ahmad Waqar said the companies were asking for increase in their margin.

He said the oil prices were adversely affecting all the developing countries and Pakistan was no exception but it was unfortunate because the international prices were in the control of oil producing countries.

The minister and secretary petroleum did not respond more than a dozen probing questions from the media men but kept on insisting the government was left with no option but to face the reality and share the losses with the consumers.

Secretary Petroleum Ahmad Waqar said the government had a petroleum related revenue target of Rs47 billion for the current fiscal year. He said the Pakistan's domestic prices were calculated on the basis of Arabian-Gulf crude rates currently at $42.5 per barrel.

Of the first eight months, the government has earned a petroleum development levy of Rs32 billion in addition to Rs9 billion payout as price differential to refineries and collected just Rs4.5 billion in PDL so far.

He said if the opportunity cost was included, the government's loss would be in the region of over Rs50 billion. He said the petrol and diesel prices in India higher than in Pakistan and ranged between R52-59 and Rs36-40 per litre respectively in various cities.

He said the role of petroleum prices could not be assigned to the Oil and Gas Regulatory Authority (OGRA) in the given circumstances, and consultant to be appointed by the Canadian International Development Agency (CIDA), would take a decision in this regard.

He agreed that increase in petroleum prices would have an inflationary impact, and said the increase was not made on the advice of the State Bank to contain budget deficit.