Ministry of Petroleum has informed Parliamentary Committee on Oil Pricing (PCOP) that government would be compelled to increase petrol price by Rs 9.43 per liter and diesel Rs 9.20 per liter from February 1, 2011, although all the political parties' representatives have strongly opposed any hike in oil prices.
According to sources, Petroleum Minister Syed Naveed Qamar assured PCOP in its meeting held on Thursday to end deemed duty on High Speed Diesel (HSD) being generated for oil refineries after elimination of circular debt issue. However, the meeting failed in developing consensus on creating a space in oil pricing mechanism to adjust rising impact of oil prices.
"The increase in petrol price by 13 percent and diesel by 12 percent that account for Rs 9.43 per liter and Rs 9.20 per liter, respectively is inevitable due to surging trend in global oil prices," sources said quoting Petroleum Minister Naveed Qamar as saying. Parliamentarians demanded to abolish petroleum levy (PL) on petroleum products and deemed duty on high speed diesel (HSD) to provide relief to the consumers. "There is no justification of charging PL when government is already collecting General Sales Tax (GST) on petroleum products," the parliamentarians added. The meeting was informed that receivables of Pakistan State Oil (PSO) against different entities including power sector stood at Rs 100 billion in beginning of current financial year 2010-11 that had swelled to Rs 142 billion.
"Government should take measures to reduce lines losses of power distribution companies (Discos) rather than increasing oil prices," the parliamentarians said. Ministry of Petroleum informed that government would have to face revenue loss of Rs 30 billion during the last six months (January-July 2011) if oil prices were not increased. "The government should take steps to end corruption in Federal Board of Revenue (FBR) which has become a centre of corruption," they added.
The parliamentarians were informed that government would have to print more currency notes in case of revenue loss due to PL on petroleum products. "This initiative will cause depreciation of rupee leading to more inflation in the country," the officials said. While talking to media men after meeting, Sardar Mehtab Abbasi said that government should reduce the line losses of Discos that stood at Rs 120 billion. "Government should improve its fiscal management," he said. Petroleum Minister Syed Naveed Qamar said that a discussion was held on oil pricing formula and parliamentarians wanted removal of deemed duty for refineries. "The financial health of refineries is poor and their production has reduced," he said.