AVN 66.93 Decreased By ▼ -0.17 (-0.25%)
BAFL 29.54 Decreased By ▼ -0.21 (-0.71%)
BOP 4.06 Decreased By ▼ -0.01 (-0.25%)
CNERGY 3.62 Decreased By ▼ -0.11 (-2.95%)
DFML 11.94 Decreased By ▼ -0.31 (-2.53%)
DGKC 43.26 Decreased By ▼ -2.10 (-4.63%)
EPCL 45.97 Decreased By ▼ -1.03 (-2.19%)
FCCL 11.81 Decreased By ▼ -0.19 (-1.58%)
FFL 5.91 Decreased By ▼ -0.04 (-0.67%)
FLYNG 6.04 Decreased By ▼ -0.14 (-2.27%)
GGL 11.41 Decreased By ▼ -0.48 (-4.04%)
HUBC 68.11 Decreased By ▼ -0.39 (-0.57%)
HUMNL 5.64 Decreased By ▼ -0.08 (-1.4%)
KAPCO 24.91 Decreased By ▼ -0.34 (-1.35%)
KEL 2.13 Decreased By ▼ -0.01 (-0.47%)
LOTCHEM 24.95 Decreased By ▼ -0.41 (-1.62%)
MLCF 24.91 Decreased By ▼ -0.79 (-3.07%)
NETSOL 75.92 Decreased By ▼ -1.88 (-2.42%)
OGDC 85.99 Decreased By ▼ -2.13 (-2.42%)
PAEL 11.11 Decreased By ▼ -0.54 (-4.64%)
PIBTL 3.99 Decreased By ▼ -0.13 (-3.16%)
PPL 66.27 Decreased By ▼ -2.44 (-3.55%)
PRL 12.92 Decreased By ▼ -0.33 (-2.49%)
SILK 0.87 Decreased By ▼ -0.01 (-1.14%)
SNGP 40.72 Decreased By ▼ -0.98 (-2.35%)
TELE 7.57 Decreased By ▼ -0.40 (-5.02%)
TPLP 15.05 Decreased By ▼ -0.37 (-2.4%)
TRG 110.33 Decreased By ▼ -2.23 (-1.98%)
UNITY 13.52 Decreased By ▼ -0.58 (-4.11%)
WTL 1.21 Decreased By ▼ -0.02 (-1.63%)
BR100 4,081 Decreased By -61.9 (-1.49%)
BR30 14,631 Decreased By -307.2 (-2.06%)
KSE100 40,376 Decreased By -501.9 (-1.23%)
KSE30 14,916 Decreased By -172.3 (-1.14%)
Follow us

As petroleum prices remained unchanged, many were quick to term it the “right” move. The same lot was losing sleep a fortnight ago, on how freezing petroleum prices would invite the IMF’s ire. Dar too, was not crucified from within the party for not passing on the impact of reduced international prices to the end consumer. Only because the prices at pump remained unchanged. Not because the petroleum levy on petrol at Rs47.26/ltr is the highest in the country’s history.

As luck would have it, lowest base price for gasoline since April 2022, offered enough room to jack up Petroleum Levy (PL) to Rs47.2/ltr, having inexplicably reduced it by Rs5/ltr a fortnight ago. The PL on petrol is now only Rs2.7/ltr shy of the revised maximum allowed limit. Of course, there is no stopping the government to revise the upper limit to an even higher number, if need be.

The IMF remains key to what happens to petroleum prices – even under Dar. The PL on petrol for the first four months of FY23 has averaged Rs27/ltr. Under the IMF program, the authorities had committed raising PL every month by Rs5/ltr. The target has been surpassed comfortably, as the average PL going strictly by the IMF plan would have been around Rs21/ltr by the end of October 2022. The government, in all likelihood, will reach the maximum PL imposition way before the committed deadline of January 1, 2023.

Recall that the base price for gasoline in rupee terms at Rs125/ltr is the lowest since March 1, 2022. Although the Arab Light refined crude averaged higher by 3.3 percent over the previous fortnight, the steady fall in dollar against PKR ensured the prices stayed down in rupee terms.

The other side of the equation is High Speed Diesel – where the government has so far tactfully managed the taxation, compensating with higher levy on gasoline. It is generally perceived that HSD has a higher inflationary impact than gasoline for obvious reasons. The average PL on HSD for the first four months of FY23 at Rs8/ltr is way short of the target.

The PL on HSD by October end should have reached Rs20/ltr – averaging Rs12.5/ltr for 4MFY23. The overall revenue equation remains well within the IMF’s plans so far – as the lost revenue on HSD is more than compensated by higher tax incidence on petrol.

The deadline to reach maximum PL on HSD is April 1, 2023. At the current pace, a monthly increase of Rs5/ltr would not cut it. The average PL on HSD would fall short of Rs32/ltr by the end of FY23, unless maximum PL on HSD is reached much earlier than envisaged. With the room on the other side now virtually gone as PL on petrol is very close to its upper limit, something will have to give. Could the government introduce a revised upper limit on PL mid-way into the fiscal year?


Comments are closed.

Petroleum revenue: So far so good

ECP postpones Punjab elections till October 8

Fed delivers small rate hike, says 'some additional' tightening possible

Have polls never been delayed before, asks Sanaullah in joint parliament session

Imran claims govt planning another operation at Zaman Park using 'special squad'

Government should make Toshakhana records from 1990 to 2001 public: LHC

At least 10 dead, 62 injured in KPK after strong earthquake

UK mosque attack suspect linked to similar incident: police

Rupee strengthens against US dollar, settles at 283.20

‘Pakistan is running out of time,’ warns PBC as IMF programme hangs in balance

KSE-100 falls over 500 points owing to IMF programme uncertainty