The government is unlikely to change petroleum products prices from April 1, 2009 despite the fact that crude oil prices have come down in the international market, sources in Petroleum Ministry told Business Recorder here on Saturday.
They said that Finance Ministry was opposing reduction in oil products prices, arguing that decline would deprive the exchequer of Rs 90-100 billion from petroleum development levy (PDL) during the current financial year. People had been expecting substantial decrease in oil prices in March, but the Prime Minister was persuaded by Finance Ministry that any reduction in prices would be tantamount to big loss to the national exchequer.
Considering that the government is committed, in its Letter of Intent submitted to the International Monetary Fund (IMF) prior to the approval of the 7.6 billion-dollar standby arrangement to bringing the budget deficit down to 4.7 percent in spite of a decline in the Gross Domestic Growth rate estimates from 3.5 percent to 2.5 percent, the Finance Ministry considers it has no option but to keep the PDL in place.
The government is not only using the earnings from oil to bridge shortfall in revenue collection but is also spending this amount on defence requirements. Sources said that IMF is happy over substantial collection of extra revenue from oil prices but at the same time has advised the government not to rely on the collection.
"If the government does not revise oil prices downward, it will earn Rs 18.5 billion as PDL for the month of April," sources said. The government has already earned about Rs 35-40 billion as PDL in the last three months (January-March).
The government had made commitment with the World Bank to accumulate Rs 30 billion PDL in the first three months (January-March) of the current calendar year and, if the government does not reduce the oil prices, total PDL collected will be Rs 43.5 billion in these three months. The Petroleum Ministry has forecast Rs 49.5 billion PDL during the three months.
Sources said that the government had earned Rs 54 billion PDL in the eight months (July-February) of the current financial year. The government is currently charging Rs 18 per litre PDL on HSD, Rs 8 per litre on JP-4, Rs 3 per litre on JP-8, Rs 22.75 per litre on petrol, Rs 30.50 per litre on HOBC, Rs 10.45 per litre on kerosene oil and Rs 8.51 per litre PDL on LDO.
The PDL collection is in addition to general sales tax (GST) of Rs 4.91 per litre on JP-1, Rs 4.63 per litre on JP-4, Rs 5.38 per litre on JP-8, Rs 7.95 per litre on petrol, Rs 9.94 per litre on HOBC, Rs 7.15 per litre on kerosene oil and Rs 6.62 per litre on LDO.
"As we receive summary from the Oil and Gas Regulatory Authority (Ogra), which is expected on Monday or Tuesday next, we will send it to the Prime Minister, who will take the final decision in consultation with the Finance Ministry. However, circumstances indicate that oil prices will remain unchanged, like the passing month," sources added.