ISLAMABAD: Petroleum Ministry has recommended the Economic Coordination Committee (ECC) to set up a mechanism for reviewing prices of petroleum products on quarterly basis, and to end 7.5 per cent deemed duty on high-speed diesel ostensibly refineries failed to upgrade its system for producing petroleum products as per international standards.

Admitting failure of the country’s refineries towards meeting international standards in the production of petroleum products, Ministry of Petroleum and Natural Resources (MPNR) in a summary sent to the federal cabinet’s Economic Coordination Committee has also sought the ECC approval for complete deregulation of Oil Marketing Companies’ (OMCs) and oil dealer’s margin on petrol and diesel.

Besides asking to end 7.5 per cent deemed duty on high-speed diesel, the ministry has recommended reducing and fixing the general sales tax (GST) on petroleum products in terms of absolute per litre price.

Also, Petroleum Levy worth Rs220bn may be used as price stabilising factor rather than a source of revenue.

“GST on petroleum products may be reduced and fixed in absolute Rs/litre terms. A review of prices on quarterly basis, Petroleum Levy may be used as a price stabilising factor rather than source of revenue, product specifications, particularly of petrol and diesel, are not keeping pace with regional countries and world due to refining constraints of local refineries.

Some of the refineries are not fulfilling their commitment for setting up the expansion and upgrading of their plants despite incentives given to them,” according to available copy of petroleum ministry’s summary with DawnNews.

A senior official at the petroleum ministry told this scribe that OMCs and dealers have shown their reservations on Pakistan Institute of Economic Development (PIDE) recommendations, as according to them, PIDE has not covered their expenditure properly in the report.

However, the OMCs were found willing to implement the PIDE recommendations, he added.

Although the petroleum ministry in its summary has recommended deregulation of OMCs and dealers’ margin on petrol for a trial period of up to six months, the dealers would be bound to display both OMCs and dealers margin clearly at their outlets that, however, would be strictly monitored by the Oil and Gas Regulation Authority (Ogra) and the respective OMC.

Moreover, the Federal Board of Revenue (FBR) would provide a detailed mechanism, particularly on tax collection for OMCs and dealers.

He added that OMCs and dealers margins on high-speed diesel were proposed to increase by Rs0.16 and 0.40 per litre respectively.