ISLAMABAD: The federal government has increased the prices of petroleum products by up to 11.8 percent for August. On Friday, the Finance Division stated that the price of petrol had been increased by Rs3.86 per litre and high-speed diesel (HSD) by Rs5.00 per litre. The price of kerosene oil (SKO) has been increased by Rs5.97 per litre and light diesel oil (LDO) by Rs6.62 per litre. The Finance Division stated, "The government has decided to revise the existing prices of petroleum products in view of rising oil prices in the global market."
On Wednesday, the Oil and Gas Regulatory Authority (Ogra) had worked out an increase of about Rs7 per litre in petrol, and Rs9.50 per litre in HSD and Rs6 per litre increase in SKO and LDO prices based on existing tax rates and import costs of Pakistan State Oil (PSO).
As per calculations, the ex-depot price of petrol is estimated at about Rs103.97 per litre, instead of Rs100.11 per litre, showing an increase of Rs3.86 or 3.8 percent. The product is mostly used in private transport, small vehicles and two-wheeler.
The ex-depot price of HSD is fixed at Rs106.46 per litre from its existing rate of Rs101.46 per litre, up by Rs5.00 per litre or 4.9percent. The HSD is mostly used in heavy transport vehicles and agricultural engines such as trucks, buses, tractors, tube wells and threshers etc.
The ex-depot price of kerosene oil is at Rs65.29 instead of Rs59.32 per litre at present, an increase of Rs5.97 per litre or 10 percent. The ex-depot price of LDO in now Rs62.86 per litre instead of Rs56.24 per litre at present, showing an increase of Rs6.62 per litre or about 11.8 percent.
The LDO is mostly used in flour mills and power plants. The government has been charging on petrol and HSD, the petroleum levy at a maximum permissible level of Rs30 per litre. The government has already increased the general sales tax (GST) on all petroleum products to a standard rate of 17 percent, across the board.
Before January 2019, the rate of GST was 0.5 percent on LDO, two percent on SKO, eight percent on petrol, and 13 percent on HSD. Besides the 17 percent GST, the government has almost quadrupled the rate of petroleum levy on HSD and petrol to Rs30 per litre from Rs8 per litre in January 2019.
The levy on kerosene and LDO remains unchanged at Rs6 and Rs3 per litre respectively. Over the last many months, the government had been increasing petroleum levy rates instead of the GST as the levy remains in the federal kitty, unlike the GST that goes to the divisible pool of taxes.
The petrol and HSD are two major products that generate most of the revenue for the government because of their massive and yet growing consumption in the country. Average petrol sales are touching 700,000 tonnes per month against monthly consumption of around 600,000 tonnes of diesel. The sales of kerosene oil and the LDO are generally less than 11,000 and 2,000 tonnes per month.
The government has reduced the Petroleum Levy (PL) on petrol at Rs 26.70 per litre, PL on HSD has been fixed at Rs 25.73 per litre. The petroleum levy on SKO has been fixed at Rs 6 per litre and Rs 3 per litre on LDO.
Copyright Business Recorder, 2020
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