ISLAMABAD, Oct 18: The government is collecting between Rs5.40 and Rs34 per litre taxes on all petroleum products in addition to causing other pricing disadvantages to the consumers contrary to its claims of extending subsidies on petroleum products.
Moreover, the size of taxation in the petroleum prices has not come down despite a sizable reduction in import parity prices of all products in the last two months, reveals a detailed analysis by the Oil and Gas Regulatory Authority (Ogra) of the current pricing structure.
The government earns a windfall increase in sales tax amount in case the import-parity prices goes up as it is calculated on a 15 per cent basis even if the government reduces collection on account of petroleum development levy on kerosene and diesel. In other words, what the government loses by reducing PDL it is compensated in the shape of higher general sales tax collection.
According to the latest price revision that took place on October 16, the ex-refinery price of motor spirit (petrol) is Rs26.19 per litre against its ex-depot sale price of Rs57.70 per litre. The government collects about Rs28 per litre in taxes and duties on petrol. These include Rs18.88 per litre petroleum development levy (PDL), Rs0.88 per litre excise duty, Rs7.53 per litre sales tax and 72 paisa per litre inland freight margin.
Similarly, the current ex-depot sale price of HOBC (High Octane Blending Component) is fixed at Rs64.88 per litre against its ex-refinery price of Rs26.90 per litre. Here, the government collects a total of Rs34.04 per litre that includes Rs23.63 PDL, Rs8.46 sales tax, Rs1.07 inland freight margin and 88 paisa excise duty.
The ex-depot price of the poor man’s fuel ‘kerosene’ is currently fixed at Rs28.81. After collecting Rs5.38 per litre in the form of sales tax and inland freight margin, the government sells it to the consumers at Rs35.23 per litre. Sales tax alone on this product is Rs4.60 per litre.
Likewise, the ex-depot price of light diesel oil a fuel that is used in agriculture and transport and has over 60 per cent share in all POL products is fixed at Rs25.71 per litre. After collecting Rs5.90 per litre, including Rs4.25 per litre sales tax, the government sells LDO at Rs32.57 per litre.
Moreover, if the deemed duty is also included, the government taxation on kerosene, high-speed diesel and LDO goes beyond Rs6.70, Rs9 and Rs6.20 per litre respectively, an official at the petroleum ministry said.
He said the petroleum ministry had proposed to reduce this deemed duty from 10 per cent to about 7.5 per cent on an average but the finance ministry and the central board of revenue were opposing the proposal.
The World Bank had recently commented that protecting old and depreciated refineries through this duty was highly questionable.
The Ogra has also explained that the Arab-Gulf mean price (freight on board) of HOBC had declined by $82 per litre from an average $348 per ton on July 14, 2006 to $266 per ton on October 11, 2006. The Arab-Gulf price of kerosene has reduced from $88 per ton on July 14 to $70 per ton on October 11, showing a reduction of $18 per ton.
Similarly, gas oil prices in the Arab-Gulf reduced from $87 per ton to $67 per ton, showing reduction of about $20 per ton. Moreover, the Naphtha prices in the Arab Gulf dropped from $653 per ton on July 14 to $487 per ton, showing a reduction of $166 per ton. As such, the prices of HOBC, kerosene, gas oil and Naphtha declined by 24 per cent, 21 per cent, 23 per cent and 26 per cent respectively.
During this whole period, the Ocean losses and handling charges hovered between $189 per ton and $280 per ton.
