ISLAMABAD, Oct 15: The government has scaled down regulatory duty by over 48 per cent on export of high-speed diesel (HSD) and superior kerosene respectively to accelerate export of oil to Afghanistan.

The tax authorities had slapped regulatory duty on HSD and kerosene last month to raise additional revenue, reduce export, meet the rising domestic demand and to cut oil import bill which is causing pressure on country’s foreign exchange reserves.

A notification issued here on Wednesday said that the rate of regulatory duty had been reduced to Rs7.28 per litre of high speed diesel (HSD) from Rs14.27 and on superior kerosene oil to Rs8.83 per litre from Rs17.31 per litre.

The decision would be effective from Oct 1.

A source in the finance ministry said that the reduction in the duty had been made on a complaint by the Afghan government, as US-led forces in Afghanistan mostly depend on supplies from Pakistan.

It was also observed that the oil exported to Afghanistan is smuggled back to Pakistan. Kerosene oil in the domestic market is hovering around Rs74.4 per litre and is mostly used in the rural areas as a source of burning in kitchen.

Statistics showed that Pakistan exported 50,000-70,000 tons of diesel each month to Afghanistan. The flow of diesel recorded a massive growth during the current fiscal year to help in reconstruction work in Afghanistan.

In June last, Pakistan suspended jet fuel to Afghanistan for indefinite period.

While Kabul is drawing jet fuel supplies from Iran to meet its domestic demand, Pakistan used to send 10,000 tons of jet fuel to Afghanistan every month.

Total petroleum products’ exports to Afghanistan stood at Rs25 billion during 2007-08. Besides to regulate exports, tax officials anticipate to raise millions of rupees revenue.

According to the formula for imposing regulatory duty on export of HSD, the exporters enjoyed Rs6.60 per litre subsidy on diesel, which they actually exported to Afghanistan.

In addition to this subsidy, the FBR has imposed one per cent coverage for exchange loss on consumer price which will be Re0.68. There will be a total duty of Rs7.28 on export of per litre diesel to Afghanistan.

For kerosene oil, the total subsidy on per litre is Rs8.21 and after imposing one per cent foreign exchange coverage loss, there will be Rs8.83 per litre duty, which would be charged for exports to Afghanistan.

According to the notification, the federal government has imposed regulatory duty equivalent to the price differential claims in rupees per litre on import of high speed diesel and superior kerosene oil to Afghanistan. The rates notified shall remain in force till an amendment is made.