ISLAMABAD: The government has yet to project petroleum levy (PL) and general sales tax (GST) on petroleum products for the next financial year 2022-23 to meet the conditions of the International Monetary Fund (IMF) and assumption of the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP).
An official of the Petroleum Division told Business Recorder on condition of anonymity that the government may not charge any PL or GST in the upcoming budget 2022-23 on political grounds as it would lead to a substantial increase in the prices of all petroleum products.
Referring to the calculation of the Oil and Gas Regulatory Authority (Ogra), he said that the ex-depot price of the petrol and High-Speed Diesel (HSD) had recommended at Rs278 per litre instead of Rs149.86 per litre and Rs260 per litre instead of Rs144.15 per litre by end of June 2022. If the government opted to add PL and GST rate, the price would further go up, he added.
The estimated PDC claim on OMCs level for next fortnight (June 1-15) is Rs66.16 per litre on petrol and Rs81.07 per litre on HSD and the projected ex-depot price without taxes of petrol is Rs215 per litre for petrol and Rs223.25 per litre for HSD for next fortnight (June -15).
POL products’ prices will not be raised: finance minister
Based on current international prices, the price differential claims for Oil Marketing Companies/ refineries are projected at Rs48 billion for May 16-31 fortnight and projected PDC is at Rs47 billion for May 1-15. On Monday (May 24), the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP)’s baseline outlook assumes continued engagement with the IMF, as well as reversal of fuel and electricity subsidies together with normalization of the petroleum development levy (PDL) and the GST taxes on fuel during next financial year.
The IMF in its report released on February 5, 2022 titled article IV consultation, sixth review under the extended arrangement under the extended fund facility, and requests for waivers of applicability and non-observance of performance criteria and re-phasing of access stated that government had made a PL projection of Rs406 billion for the financial year 2022-23 against a revised target of Rs356 billion for the current financial year. The total collection of PL in first nine months (July-March) of current financial year was 2022
An official of Petroleum Division on the condition of anonymity told Business Recorder that the IMF has estimated that Pakistan requires Rs1.4 trillion in subsidies for keeping the POL prices unchanged for next financial year. On May 19, State Minister for Energy Musaddiq Malik said that Rs700-800 billion budget was needed for the fuel subsidy.
Sources in the Finance Ministry said the accumulation of the PDC may be greater in June 2022, if the prices of petroleum products were not increased.
Copyright Business Recorder, 2022
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