ISLAMABAD: After maxing out on the legislated petroleum levy on petrol at 50 rupees per litre effective 1 November, the government raised the levy on high speed diesel (HSD) from 30 rupees per litre to 32.50 rupees per litre effective 1st January 2023.
The main petroleum levy revenue generators are petrol and HSD due to consumption and therefore their contribution to domestic inflation is significant. Consumption for the first fifteen days of January has been estimated at petrol (92 Ron) 382,120 metric tons, HSD 340,855 metric tons, SKO 4,000 metric tons and LDO 925 metric tons.
The PL on SKO has been decreased from Rs 13 per litre to Rs 4.34 per litre and PL on LDO reduced from Rs 17.32 per litre to Rs 8.56 per litre. For the first half of January, petroleum levy collections of Rs 25.9 billion from petrol, Rs 10.1 billion from HSD, Rs 36 billion from SKO, and Rs 16 billion from LDO have been projected.
Former Finance Minister Hafeez Ahmed Pasha told Business Recorder that losses are expected on account of the budgeted PL collection of Rs 750 billion revenue agreed with the IMF for the current fiscal year with an estimated collection for the year at between Rs 300-350 billion.
POL products’ prices kept unchanged
July-December 2022 collections under petroleum levy were Rs 96 billion (12.8 percent of the budgeted collection).
Another official on condition of anonymity told Business Recorder that the Government’s recent decision on PL indicates that it is yet to begin to implement “prior” conditions agreed with the IMF.
The Oil and Gas Regulatory Authority (Ogra) had recommended an increase of Rs 8.76 per litre in SKO and Rs 7.73 per litre in LDO price. The regulator worked out an increase in SKO price from Rs 171.80 to Rs 180.59 per litre and LDO from Rs 169 to Rs 176.73 per litre.
However, on Saturday, Finance Minister Ishaq Dar announced that the government has decided to maintain the existing prices of petroleum products for the next 15 days with effect from January 1, 2023. The Federal Board of Revenue’s (FBR) revenue shortfall was Rs 225 billion in December 2022 with provisional collections at Rs 740 billion against the target of Rs 965 billion.
When contacted, FBR officials said that so far no proposal is under consideration to impose sales tax up to the standard rate of 17 percent on petroleum products – a component of the contingency plan agreed with the Fund in the seventh/ eight review in the event that the government failed to meet the targeted revenue in any month.
Copyright Business Recorder, 2023