Lagatar24 Desk
Islamabad, Oct.30: Pakistan’s oil consumption is gradually returning to pre-Covid levels as the country’s economic activity has picked up and worldwide prices have been rising, despite supply constraints imposed by oil-producing countries and other supply chain issues.
The ex-depot price of petrol is currently Rs137.79 a litre in Pakistan. It is primarily utilised in private transportation, small vehicles, rickshaws, and two-wheelers, and it has a direct impact on middle- and lower-middle-class budgets. HSD is now priced at Rs134.48 ex-depot. Because it is mostly used in heavy transport vehicles, railroads, and agricultural engines such as trucks, buses, tractors, tube-wells, and threshers, its price is regarded as very inflationary.
Light Diesel Oil (LDO) in the country is now priced at Rs108.35 per litre, while kerosene is priced at Rs110.26 per litre. Unscrupulous elements mostly utilise kerosene to mix it with petrol and, to a lesser extent, for lighting in rural regions. Flour mills and a number of power plants consume LDO.
While the record-high petroleum costs have begun to sting the common man, the incumbent political government is also feeling the squeeze. The hefty Rs. 610 billion collection target through petroleum duty appears to be in jeopardy. Thanks to the oil rally, the loss is largely offset by higher sales volumes and higher customs duty yield on products at the import stage. Surprisingly, the government is currently under IMF pressure to impose extra taxes in order to fully compensate for the loss of the petroleum levy.
According to the Pakistan daily, DAWN (https://www.dawn.com/news/1654833/petroleum-prices-likely-to-rise-by-up-to-rs8 ), if the Pakistan government decides not to raise existing tax rates, fuel prices could rise by up to Rs. 8 per litre in the next 15 days.
According to reliable sources, the government is currently debating whether to raise the petroleum duty on November 1 or 16. The overwhelming consensus is that the levy should be raised by mid-November to ensure a regulated increase in prices when the currency rate begins to fall.
The Oil & Gas Regulatory Authority (OGRA) and Petroleum Division have calculated a Rs.6 per litre rise in petrol and Rs. 8 per litre increase in high speed diesel (HSD) based on existing tax rates, import parity price, and exchange rate.
Other items, such as kerosene and light diesel oil, are expected to rise in the same range, owing to currency losses and higher international oil prices in the past 10-12 days of import cargo.
The Pakistan government is considering raising the fuel duty by Rs. 4 per litre on Sunday or November 16, according to an official, and will rely on its interactions with the International Monetary Fund to revive its programme.
Pakistan’s Energy Minister, Hammad Azhar, stated earlier this week that the government was under pressure to eliminate levies on petroleum goods. The government had set an annual revenue target of Rs. 610 billion from the petroleum levy, with an average monthly collection of around Rs.50 billion, while the total actual collection in the first four months was around Rs.50 billion. The government presently levies a petroleum duty of Rs.5.62 per litre on petrol and Rs5.14 per litre on HSD.
In addition, the government levies a customs charge of Rs. 9.29 per litre on petrol and Rs.8.81 per litre on HSD, as well as a GST of Rs.9 and Rs.13 per litre on these two goods.
A final decision about the price increase would be announced by the Ministry of Finance after consultations with the Prime Minister on Sunday.
Because of their vast and still-growing usage in Pakistan, petrol and HSD are two primary goods that generate the majority of money for the government.
Instead of the former mechanism of monthly estimates based on the import cost of Pakistan State Oil, the government now revises oil prices every two weeks to pass on worldwide prices reported in Platt’s Oilgram.
