15pc cut in oil prices recommended

ISLAMABAD: On Prime Minister Shehbaz Sharif’s explicit instructions to reduce the price of petroleum and products in line with the reduction in their international price the Finance Division on Wednesday moved a summary seeking up to 15 percent reduction in petroleum prices with effect from July 16 – one day prior to the 20 by-elections to be held in Punjab that would determine the fate of the Punjab government.

As usual, the final decision in this regard will be taken by the Prime Minister.

“Any reduction in the price of petroleum and products will be in line with the IMF agreement with the Petroleum Levy (PL) remaining unchanged at 10 rupees per litre while the reduction in the international price will be passed onto the consumers”, an official of Petroleum Division told Business Recorder on condition of anonymity.

At present the PL on petrol stands at Rs10 per litre, on HSD, SKO and LDO at Rs 5 per litre each while sales tax is zero.

National Assembly has approved a rise in the maximum limit of PL from Rs 30 per litre to Rs 50 per litre to achieve the budgetary target of Rs 750 billion in Finance Bill 2022-23.

Sources in Petroleum Division told this correspondent that it the government is unlikely to fetch Rs 750 billion from PL in the current financial year at the current PL rate as that would enable a maximum collection of Rs14 billion per month. Additionally, a revenue shortfall of Rs 45 billion per month would be experienced if the 17 percent general sales tax (GST) is not slapped on these products.

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Estimates of oil marketing companies (OMCs) indicate that based on current rate of PL, the ex-depot price of petrol may come down by Rs 17.21 per litre, high speed diesel (HSD) by Rs 41.78 per litre, kerosene oil (SKO) by Rs 30.38 per litre and light diesel oil (LOD) by Rs 32.38 per litre.

This reduction would bring the price of petrol down from Rs 248.74 to Rs 231.53 per litre, HSD from Rs 276.54 to Rs 234.76 per litre, SKO from Rs 230.26 to Rs 199.88 and LDO from Rs 226.15 to Rs 199.77 per litre.

In last 15 days, international crude oil price has dropped below $94 per barrel from $104.09 per barrel.

Separately, PTI central information secretary Farrukh Habib said that reducing prices of petroleum products a day before the crucial by-elections in Punjab is nothing but a wilful attempt to rig the polls.

He challenged the government to bring down the price of petroleum products to Rs150 per litre as there has been a significant decrease in oil prices in the international market.

“The “imported regime” is trying to befool the masses by staging the drama of reducing the oil prices, but the people are going to reject them on July 17, which is evident from the mammoth election rallies of Imran Khan,” he added

Unlike Pakistan, Indian government has kept petroleum prices unchanged since May 2022 after it reduced excise duty to ensure minimization of the loss of purchasing power of the poor to middle income households. However, to address the shortage, the government, on July 1, imposed a windfall tax on crude oil produced locally and levied additional excise duty on exports of petrol, diesel, and aviation turbine fuel.

Copyright Business Recorder, 2022