ISLAMABAD: The notification issued by the Ministry of Energy on the morning of 16th November for effective POL rates for the next fortnight is baffling on two counts: (i) reference to standard GST rates (17percent), when the prevailing GST is zero on all POL products; and (ii) barring superior kerosene oil (wherein petroleum levy was raised from Rs5.98 effective 1 to 15 November to Rs8.19 per litre) levy on all other POL products remains unchanged.
In the Finance Bill 2022, the government allowed itself to raise the petroleum levy limit from 30 rupees per litre to 50 rupees per litre and used the upper limit to indicate that the budgeted petroleum levy (and GST rates which remained zero) was not imposed on High-Speed Diesel (which was retained at 12.59 rupees per litre) superior kerosene oil where the levy is 8.19 rupee per litre and light diesel oil with the levy at 6.24 rupee per litre.
However, the levy on petrol has been retained at the upper limit of 50 rupees per litre.
In the seventh/ eight review of the Extended Fund Facility (EFF) of the International Monetary Fund (IMF) uploaded on its website end of August projected collections under the head petroleum surcharge at 855 billion rupees (against the original programme requirement of 406 billion rupees). Informed sources in the Finance Ministry told this correspondent that a shortfall under this head will be concerning for the Fund and may delay the success of the ninth mandatory review.
The budgeted revenue from petroleum levy in the current fiscal year is Rs 750 billion for 2022-23; however in the first quarter of the current year the government collected only Rs 47.476 billion under this head or 6 percent of the budgeted collection, official documents with this correspondent reveal.
While talking to Business Recorder, Minister for State for Energy (Petroleum Division) Musadiq Malik claimed that the government had decided to raise the levy on all POL products to the maximum limit allowed and only impose GST once that limit is reached.
Petroleum prices to stay unchanged for next fortnight: Ishaq Dar
However, the government has pledged in the seventh/ eighth review to the Fund that if in any one-month revenue targets are unmet a contingency plan would come into effect which envisages increasing the rate of GST on fuel as a prelude to reaching the standard rate of 17 percent is one of such contingency measures.
For the second half of November 16-30, the federal government rejected the summary of the Oil and Gas Regulatory Authority (OGRA) as Federal Finance Minister Ishaq Dar announced at 10 pm on 15 November that prices of petroleum products will be retained at November 1 level with PL and GST rates unchanged. This; however, does not apply to superior kerosene oil.
The regulator proposed to maintain price of petrol and HSD at the level of the first half of November with prevailing PL and GST rates, but proposed adjusting SKO petroleum levy (which was accepted by the government) and LDO levy which was not accepted by the government.
The government decided to reduce the exchange rate adjustment to zero and Inland Freight Equalisation Margin (IFEM) has been adjusted downward by Rs 3.21 and Rs2.72 per litre on petrol and HSD, respectively with effect from November 16.
Copyright Business Recorder, 2022
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