Ministry of Finance announced on Saturday a reduction in prices of petroleum products for month of September owing to a decrease in global oil prices. The government had passed on full impact of reduction in prices of petrol, kerosene oil and Light Diesel Oil (LDO). However, it did not pass on full relief to consumers in prices of high speed diesel (HSD).
Sources said the Federal Board of Revenue (FBR) maintained the rate of General Sale Tax (GST) at 17 percent on all POL products at the level of previous month of August. However, the FBR did not issue a notification till late night.
In a statement, Finance Ministry says that the government was charging around Rs 38 per litre tax on petrol and Rs 42 per litre tax on high speed diesel. The average purchase price of petrol inclusive customs duty over the last imported period has been Rs 71.89 per litre and that of HSD at Rs 82.06 per litre prior to taxes and cost of distribution.
After adding taxes and distribution charges in cost of purchasing petrol and high speed diesel, over last month, the ex-depot sales prices are fixed at Rs 113.24 per litre and Rs 127.14 per litre, respectively. The share of distribution charges in not more than Rs 3 per litre on these products.
Finance Ministry states since last three months, the GST has been fixed at 17 percent. In financial year 2015-16, however, it soared to as high as 71 percent on HSD. Petroleum Levy is also fixed. So, any variation in purchase price of PSO over the last imported period is notified by Ogra. If international prices show a downward trend, this occurs with 30-40 days subject to exchange rate movement. However, finance ministry did not disclose how much petroleum levy it was charging from the consumers on petroleum products.
According to the ministry, the prices of petroleum products are determined by Ogra using actual orders placed by PSO for HSD and petrol for the last month. Predefined costs like freight, ports handling and OMCand retailers margins are then added by Ogra.
The oil and gas regulator proposed to the government to reduce the prices of motor sprit (MS) by Rs 4.59 per litre (3.9%), kerosene oil Rs 4.27 per litre (4.1%) and Rs 5.63 per litre (5.8 %) LDO. The regulator had suggested a cut in the price of High Speed Diesel (HSD) by Rs 7.67 per litre or (5.8%). However, the government slashed its price by Rs 5.33 per litre from Rs 132.47 to Rs 127.14 per litre. The new prices of petrol, kerosene oil and LDO stand at Rs 113.24, Rs 99.57 and Rs 91.89 per litre, respectively. These prices in term of rupee parity for petrol are significantly lower than regional markets like India (Rs 168.25 per litre), Sri Lanka (Rs 144.15 per litre), Bangladesh (Rs 168.79 per litre).
The government is compelled to pass on to the consumers, full price decreased calculated by Oil and Gas Regulatory Authority (OGRA) for the month of September to avoid criticism from opposition parties in parliament and general public.
An official of Federal Board of Revenue (FBR) said the government is following an IMF programme and there is no option to pass on to consumers the full price decrease calculated by Ogra. He said because of massive shortfall of Rs 68 billion in revenue collection in the first two months of the current fiscal year, it is all the more important not to be lenient on revenue targets.
Based on import price of the Pakistan State Oil (PSO), the ex-depot price of petrol has been brought down by 3.9pc to Rs 113.24 per litre instead of Rs 117.83 per litre. The ex-depot rate of HSD has been reduced by Rs 5.33 per litre. As a result, the price has been fixed at Rs 127.14 per litre against Rs 132.47 per litre at present.
The crude oil had declined by around 11 percent in Arabian Gulf, from $70 in April to $59 per barrel on August 31. According to a tweet of Minister for Economic Affairs Hammad Azhar late Saturday night, "Previous governments used to enhance tax rates when international oil prices went down in order to increase tax collection. In 2016 sales tax on petrol went up till 56% as oil prices fell. We have fixed the sales tax at 17% and the benefit of any decrease in international oil prices shall be passed on," tweet added.
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