Dar was not a fan of increasing petroleum prices. At least not from the outside. At the first chance, he made sure petrol prices at pumps went down. The benchmark Arab Light refined petrol price for the fortnight went down 9 percent from a week Ag – lowest since January 2022. The currency has lot 55 percent value since January 2022, when the benchmark price was this low. For the fortnight, a 4 percent further depreciation in PKR against the greenback meant Arab Light gasoline reference price went down by 5 percent in PKR terms over the previous fortnight.
Rs130/ltr for the benchmark refined product referenced for the current fortnight is still the lowest since February 2022. Interestingly, Petroleum Levy on gasoline (petrol) was brought down by Rs5/ltr to Rs32.4/ltr, as against a phased monthly increase agreed with the IMF. On the other hand, PL on High Speed Diesel was raised by Rs5to Rs12.5/ltr. Assuming, a simplistic view of both products having equal share – the average PL for the fortnight stays unchanged from previous revision.
Some observers view the development as concerning, especially in light of the IMF program. In all honesty, Pakistan still appears well on track to achieve the target of reaching the maximum limit of Rs50/ltr on petrol by Jan 2023. From current rate, two revisions of Rs10/ltr is all what it takes to meet the indicative target. Mind you, the PL was jacked up by Rs17/ltr last month, so Pakistan is not too far behind the clock.
On HSD, the target is to get there by April 2023. There is some catching up to do on that front, given the PL have only reached Rs12.5/ltr – but there is enough time to meet this one as well. Just like petroleum price increase must not be viewed with raised eyebrowsevery time, it is equally important, that any relief which is merely a result of international prices should not be looked down upon by revenue enthusiasts. Especially, when revenue is not being compromised at all. If anything, the custom duties have also been increased on both products from 2.5 percent to 5 percent, as part of the IMF program.
As Pakistan edges closer to levying the maximum PL, it will be secretly hoping for the oil prices to keep reducing, because the next step is to revive the suspended standard GST on petroleum products. That would be a challenge even at current oil prices. But for now, there is no need to panic in terms of revenue collection on petroleum.