RD on POL products: ECC tells Ogra to recover Rs 482m net claims from consumers

The Economic Coordination Committee (ECC) of the Cabinet has directed the Oil and Gas Regulatory Authority (Ogra) to recover Rs 482 million net claims from consumers on behalf of OMCs within three months effective July 1, 2018, well-informed sources told Business Recorder. The Petroleum Division informed the ECC that the Federal Board of Revenue (FBR) imposed Regulatory Duty (RD) @ 2.5 percent on imported HSD (diesel) and 2 percent on MS (petrol) and petroleum crude oil through a notification of April, 30, 2015.
After issuance of the notification, Petroleum Division submitted a summary to the ECC on July 03, 2015 seeking approval on the proposals as follows: (i) OMCs/refineries should be, in principle, allowed to account for statutory duty such as subject duty in monthly prices of petroleum products, being part of actual cost of petroleum product; and (ii) since the notification of RD was received on May 4, 2015, while prices of petroleum products were notified/announced on April 30, 2015, therefore the impact of duty on MS and HSD could not be passed on to the consumers through ex-depot sale prices effective from May 01, 2015. The source said, despite this OMCs paid RD in May 2015, resultantly respective OMCs should be allowed to recover such arrears from subsequent monthly prices through OGRA.
The Petroleum Division further revealed that the ECC on July 8, 2015 had approved the proposals however the second proposal was approved with the condition to get verified/reconciled accounts/volume of the product by the FBR, Ogra and Ministry of Energy and report the matter to the ECC subsequently.
Accordingly, Ogra has verified the requisite claim and prepared a verification report based on the information provided by the FBR for submission to the ECC. The report was reviewed by the Petroleum Division and it was found that it was prepared in light of the ECC decision. It has transpired from the report that Ogra after carrying out verification, worked out net claim of Rs 482.13 million (PSO Rs 356.91 million and Shell Rs 125.22 million) which could not be recovered by OMCs through monthly prices of May 2015 which was now required to be recovered by said OMCs under the existing pricing mechanism in succeeding month(s) through Ogra to which approval of the ECC was solicited.
The Petroleum Division apprised that subsequent to subject regulatory/custom duty of April 30, 2015, the government enhanced the custom duty through custom''s notification of November 30, 2015 and June 24, 2016. The duty and in future if similar indirect taxes are levied by the government on petroleum products and crude oil, would be passed on to the consumers under the similar procedure that has already been approved by ECC for the subject regulatory duty of April 30, 2015.
After detailed discussion, the ECC approved the proposal with the directions that Ogra will carry out requisite recovery of net claims in three months effective from July 1, 2018.