ISLAMABAD: Despite a reduction in international crude price, the government on Friday increased the prices of petroleum products by up to 4pc for the month of June.
With this adjustment, the petroleum prices in the country are now at the highest-ever mark despite the international crude market price at $67 per barrel, which is almost half of the 2008 highest record of $147 when retail prices stood below Rs80 per litre.
An official told Dawn that the crude price had dropped by 7pc in the Arabian Gulf Market — the source of Pakistani imports — over the last month from $72 on April 28 to $67 per barrel on May 29, but the currency devaluation caused the major negative impact.
New prices of petrol, high speed diesel fixed at Rs112.68 and Rs126.82 per litre, respectively
Based on import parity price of Pakistan State Oil (PSO) for purchases in May, the government approved Rs4.50 per litre increase in the price of high speed diesel (HSD), Rs4.26 in petrol, Rs1.69 in kerosene and Rs1.68 for the price of light diesel oil (LDO). As such the ex-depot rate of HSD has been increased from Rs122.32 to Rs126.82 per litre, indicating an increase of 3.67pc. Likewise, the ex-depot petrol price has been increased from Rs108.42 to Rs112.68 per litre, up 3.92pc.
The price of kerosene oil has been enhanced from Rs96.77 to Rs98.46 per litre, showing a rise of 1.74pc. The new ex-depot price of LDO has been fixed at Rs86.94 per litre, which was previously Rs88.62 per litre, showing an increase of 1.93pc.
To make price adjustments, the GST rate has been set at 13pc for both petrol and HSD and 17pc for LDO and kerosene. Until January, the GST on LDO and kerosene was 0.5pc and 2pc, respectively. The GST on petrol and HSD was 8pc and 13pc, respectively.
Besides, the government has more than doubled the rate of petroleum levy on HSD in recent months. It was raised from Rs8 to Rs18 per litre. Similarly, the levy on petrol has also been increased (by 40pc) from Rs10 to Rs14per litre. The petroleum levy on kerosene oil and LDO remains unchanged at Rs6 and Rs3 per litre, respectively.
Over the past two months, the government has started increasing petroleum levy rates to partially recoup a major revenue shortfall faced by the Federal Board of Revenue.
Petrol and HSD are two major products that generate most of revenue for the government because of their massive consumption in the country. Total HSD and petrol sales are touching 800,000 and around 700,000 tonnes a month. The monthly consumption of kerosene oil and LDO are generally less than 10,000 tonnes.
Petroleum prices have generally been on the rise since early 2017 except a couple of reductions. Over the past couple of weeks, international benchmark Brent prices have been inching up and the government has been mopping up tax rates in run up to finalisation of an IMF-assisted stabilisation programme. The government has already announced increasing power and gas tariffs over the next few months.
Published in Dawn, June 1st, 2019