ISLAMABAD: The government on Wednesday increased the prices of all petroleum products by up to 4.7 per cent for the next 15 days to pass on partial impact of rise in international prices.
According to a notification issued by the ministry of finance, the ex-depot price of petrol was increased by Rs2 per litre and that of high-speed diesel (HSD) by Rs1.44 per litre. The ex-depot price of kerosene was increased by Rs3.86 per litre and that of LDO by Rs3.72 per litre, respectively.
As such, the ex-depot rate of petrol was fixed at Rs112.69 instead of Rs110.69 per litre at present, showing an increase of 1.8pc. Likewise, the ex-depot HSD price was set at Rs113.99 per litre from existing rate of Rs112.55 per litre, up by 1.3pc.
Similarly, the ex-depot price of kerosene was fixed at Rs85.75 per litre instead of Rs81.89 per litre, showing an increase of 4.7pc. Also, the ex-depot price of LDO was set at Rs83.40 per litre instead of Rs79.68 per litre, up 4.67pc.
The government had to reduce its tax on petrol and diesel to allow a minimum increase. Otherwise based on existing rates, the Oil & Gas Regulatory Authority (Ogra) had worked out significantly higher prices. For example, it had worked out the price of HSD to go up by Rs6 per litre and that of petrol by Rs3 per litre.
The finance ministry said the government maintained the practice of keeping the prices of petroleum products at an affordable level and had given up Rs252.4bn petroleum levy it could have collected against the budgeted Rs30 per litre on all products. The ministry perhaps, however, did not know that under the existing law it could collect Rs30 per litre petroleum levy only on petrol and diesel while its maximum rate on kerosene and LDO could not increase beyond Rs8-10 per litre.
It said Ogra had been recommending a substantial increase in the prices of petroleum products since May 1, corresponding to the increase in prices of petroleum products in the international market. However, the government absorbed the impact of increase by making adjustments in sales tax and petroleum levy. Currently, the petroleum levy rates are at the lowest level of last six years, the finance ministry said.
An official, however, said the government had already collected higher than budgeted revenue on petroleum products through petroleum levy in fiscal year ending June 30, 2021. He said about Rs500bn are estimated to have been collected on petroleum levy against a budget target of Rs450bn.
Over the last two years, the government has been tweaking with petroleum levy rates instead of GST as levy remains in the federal kitty while GST goes to the divisible pool taxes and thus about 57pc share is grabbed by the provinces.
Published in Dawn, July 1st, 2021