Extra revenue collection goal: Govt may not pass full relief on to POL consumers

ISLAMABAD: The federal government may not pass on the full relief to the end-consumers in a bid to collect additional revenue from petroleum products from September 16.

According to oil companies’ estimates, Pakistan State Oil (PSO) imported two cargoes of petrol at $14 and $21 premium which is high due to the unstable exchange rate. Recently, an additional cargo has arrived.

If the government includes the recently arrived cargo in the calculation then there may be a reduction of Rs1 per liter on petrol. Petrol price may come down by Rs10 per liter if the Oil and Gas Regulatory Authority (Ogra) does not include the fresh import in the determination of prices.

The government has been playing tricks to keep the oil prices low and therefore, it is a possibility that it may choose the option of excluding the fresh cargo of petrol.

In line with the Platts and exchange rate, high-speed diesel (HSD) price may decrease by Rs1.68 per litre.

The estimates are based on the last notified rate of petroleum levy (PL) and zero percent general sales tax (GST).

The proposed revisions are subject to no increase or decrease in PL, GST imposition or exchange loss adjustment. Officials in the oil sector predicted that the PL on petrol would remain unchanged at Rs37.50 per litre on petrol and Rs7.50 per litre on HSD and that there would also be Rs11 adjustment for the previous month exchange loss as well. Another factor that can impact the price is the imposition of sales tax, they added.

Govt aims to collect Rs91bn thru GST, PL on POL products

The government may increase the sales tax on petrol and diesel to make revenue on the sale of these products. PSO is now looking for an exchange rate adjustment for petrol and HSD.

The price of HSD, however, may go down by around Rs1.68 per litre from Rs247.43 to Rs245.75 per litre.

In this calculation, the margin of the Oil Marketing Companies (OMCs) and dealers on the sale of petroleum products would be Rs3.68 per litre and Rs7 per litre respectively.

This fortnight the average exchange rate taken has been Rs217.8, up by Rs11 compared to the last fortnight.

Sources said that the government and the regulator have been applying different maneuvers to keep the oil prices low to avoid political backlash.

As PSO imports petroleum products, the state-run oil marketing company is allowed exchange rate adjustments to save itself from losses.

In an attempt to minimise the impact of oil prices on the masses, the government devised a new formula for calculating the exchange rate for oil price revision.

Earlier, it was taking the exchange rate of the last day, however, under the revised formula it is now taking the average exchange rate. On August 31, 2022, the last day on which the oil price revision was meant to be calculated, the exchange rate had come to Rs218.95. Instead, the government took an average exchange rate of Rs217.81.

The Ogra, however, built pressure on PSO to stagger the exchange adjustment loss. According to the existing mechanism, the government only takes PSO prices to set new prices for petroleum products in the country.

Currently, PSO receivables crossed Rs500 billion.

Copyright Business Recorder, 2022