September 11, 2002	Wednesday	Rajab 3, 1423

KARACHI, Sept 10: Petrol and diesel have become costlier by eight to nine per cent from September 1, 2001 to September 2002 as a result of increase in petroleum development levy (PDL) followed by surge in dealers’ and distributors’ margins and not because of increase in international oil prices.

Petrol is now priced at Rs34.32 per litre as compared to Rs31.64 per litre on September 11, 2001, showing a rise of 8.47 per cent.

Diesel price is now tagged at Rs19.48 per litre as compared to Rs17.77 per litre, up by nine per cent, while kerosene, which was being retailed at Rs17.40 per litre, is now available at Rs18.41 per litre.

Oil prices were hovering between $26-27 a barrel a year back as compared to prevailing prices of $28-29 a barrel.

The impression that the international prices have been responsible for the increase in domestic oil prices does not click as the real reasons are different.

In the last one year, the Pakistani rupee has been appreciated by seven to eight per cent against the US dollar which means that the impact of rising oil price have already offset by the rupee surge. But when it comes to passing on the impact to end users, it could not happen.

Head Research, Invest Capital and Securities, Mohammad Sohail describes three main reasons that resulted in consumer price hike of main petroleum products in the last one year.

The government’s decision to increase the petroleum development levy (PDL) by at least two times in the last one year has totally nullified the impact of rupee’s shine against the greenback, resulting in price flare up of oil products, he said.

Two more decisions like increasing the dealers’ margin to four per cent from three per cent followed by increase of commission of oil marketing companies (OMCs) to 3.5 per cent from two per cent, proved another reasons in enhancing the oil prices at local levels, Sohail said.

According to third quarter report (Jan-March 2001-2002) of the State Bank of Pakistan (SBP), the increase in petroleum development levy (PDL) by Re0.75 per litre and Re0.25 per litre increase in the tax on other petroleum products could not help in overcoming revenue shortfall.

Although petroleum and gas surcharges contributed Rs5.23 billion ‘more’ than the targeted amount, this was insufficient to cover the revenue shortfall stemmed from lower tax collections, the report said.