KARACHI, July 5: Industrial and automobile lubricants have become costlier following levy of 10 per cent excise duty on ad valorem basis on the retail price of lubricants in 2006-07 budget. Previously, the duty was charged at Rs7.15 per litre regardless of the price of lubricants.

As a result all lubricant makers, both multinationals and local medium size producers, have enhanced their rates in the market soon after the budget.

Maintaining a petrol-driven car has been becoming a challenging task as petrol prices have already reached a high level to Rs57.70 from Rs33.81 per litre on June 30, 2001.

For instance, ‘Shell Adavance’, a lubricant for two wheelers engine, (less than one litre) is now priced at Rs130 as compared to Rs110. Its three litre pack for automobiles now sells at Rs600 as compared to Rs555, while 4 litres pack is available at Rs800 as compared to Rs740 earlier.

However, chairman All Pakistan Lubricants Manufacturers Association (Aplma), Mian Zahid Hussain offered a different view, saying that there are some other factors, besides excise duty, that drive the prices to go up further.

He said the National Refinery Limited (NRL) enjoyed a monopoly in producing lube base oil. The refinery has played havoc with the prices. A year back, lube base oil was available at Rs30 per litre as compared to Rs71 per litre at present. Even on Wednesday the NRL raised the price by Rs2 per litre.

Currently, the high quality auto lubricant is priced at Rs200 per litre in the market which can be evident from the high prices of lubricants being marketed by the leading players.

The impact of increase in excise duty has now come to Rs20 a litre as compared to the pre-budget price of Rs7.15 per litre, he added.

Pakistan’s total lubricant market (industrial and auto) is 325,000 tons per annum in which the local industry contributes 200,000 tons. Out of remaining 125,000 tons – some 15,000 tons is imported, while the share of reclaimed oil is 10,000 tons. As many as 70,000 tons of lubricant is being smuggled from Iran annually, while 30,000 tons is being produced by mixing diesel and rubber.

Zahid said that the association had asked the government to completely withdraw the excise duty in the budget but instead it increased the levy.

The average quality of lubricant is now priced at Rs125 per litre as against Rs100 per litre before the budget. Similarly, the Iranian lubricant costs just Rs60 per litre in the market.