The All Pakistan Business Forum (APBF) has urged the government to transfer the whole benefit of reduction of crude oil prices in the international market to the industry, as the light crude has dropped by 52.77 per cent to $26 per barrel from $55 in January 2015, but the government reduced petrol and diesel prices by a meagre 3 to 6 percent during last one year.
The APBF President Ibrahim Qureshi said the Oil and Gas Regulatory Authority (OGRA) has recommended reduction of up to 21 per cent in prices of petroleum products for the month of February but government passed on partial benefit of just Rs 5. "The slight cut in petroleum prices is not a reflection of the huge drop of more than 50 percent oil price in the international market," he said.
He said that the Oil and Gas Regulatory Authority recommended reduction of up to 21 per cent in prices of petroleum products for the month of February, based on existing tax rates but the government has declared very slight cut. Quoting the energy experts, Qureshi said that the prices could be brought down by up to 50pc if the general sales tax rate was reverted to the normal 17 percent but the government is maintaining GST rates of up to 47 percent on some products to loot the public. He said the crude and product prices in the international market had declined by around 30 percent or about $10 per barrel in the month of January.
In January 2015, petrol and diesel prices stood at Rs 78.3 and Rs 86.23 per liter while currently the two fuels were selling at Rs 76.2 and Rs 80.79. The government instead of passing on the benefit of record low world oil prices to consumers has raised petroleum development levy (PDL) and general sales tax. Currently, consumers were paying around Rs 24 and Rs 27 per liter sales tax on petrol and diesel.
He said oil prices had been on the decline due to global oversupply and sluggish demand, but domestic oil prices did not show any big drop as the government raised taxes to meet its budgetary targets. The furnace oil price declined by 27 per cent during the last year in line with international prices but in Pakistan no such benefit was passed on to the industry.
He said that 90 percent of furnace oil is consumed by the power sector, as 40 percent of country's total electricity is generated through it and if furnace oil price is declined the electricity rates will be down automatically. It has been the practice that the government focuses on increasing the GST on POL products to maintain its revenue collection while the consumers are deprived of this benefit. The APBF has been continuously urging the government for broadening of tax net and avoiding the increase in indirect taxes in general and on oil products in particular. Cost of bank borrowing still hinders new business opportunities. The economic managers may be making tall claims, but the current situation is far from satisfactory for a nation with per capita income of $1370 and a growing gap between the rich and the poor, he said.