Hike in LPG, oil prices to cause Rs 700 million additional burden on consumers: PIAF

The Pakistan Industrial and Traders Associations Front (PIAF) have condemned the government's decision to increase prices of three major petroleum products. The Rs20 per 11kilogram domestic cylinder for the month of November will cause an additional burden of about Rs700 million on consumers during this month, said PIAF acting Chairman Nasir Hameed and Vice Chairman Javed Siddiqi here on Saturday.

It is unfortunate that besides 17 percent GST, the government has increased more than doubled the rate of petroleum levy on HSD in recent months to Rs21 per litre from Rs8 per litre, while levy on petrol has also been increased by 50 percent to Rs17.20 per litre from Rs10 per litre, they said.

In recent months, the government has already increased general sales tax on all petroleum products to the standard rate of 17 percent to generate additional revenue. Until January this year, the government was charging 0.5 percent GST on LDO, 2 percent on kerosene, 8 percent on petrol and 13 percent on HSD. This hike in fuel rates would lead to increasing cost of production and cost of doing business as well. They argued that the high cost of doing business is hindering Pakistan in achieving its export target.

Though the prices of oil in global market are fluctuating yet the authorities can keep the rates stable by reducing tax ratio which is highest in the region. The government increased the prices of three major petroleum products of High Speed Diesel (HSD), petrol and liquefied petroleum gas while reduced the prices of two comparatively insignificant products of kerosene and light diesel oil (LDO) whose consumption is not so high.

They said that last month, the government had kept the petroleum prices unchanged to earn windfall revenue of over Rs4.5 billion despite up to 2.6pc cut worked out by Ogra for October. The government had instead increased the petroleum levy on HSD and petrol. The government will be losing only about Rs650 million if it keeps the prices largely unchanged for next month, but will earn a lot of goodwill at a time when opposition parties are holding big protest rallies.

Besides, the price of LPG (liquefied petroleum gas) has also been increased by Rs20 per 11kg domestic cylinder to Rs1,495 from the existing rate of Rs1,475. They severely criticized the federal government for ignoring the recommendations of Oil and Gas Regulatory Authority (OGRA) regarding lowering the prices of petroleum products last month.

They said that the Oil and Gas Regulatory Authority (OGRA) had recommended up to 2.6 percent cut in the prices of petroleum products but the government did not pay heed to it. He said that the petroleum levy which should be at around Rs8 to Rs9 was being charged at Rs17.

Over the last few months, the government has started increasing petroleum levy rates to partially recoup a major revenue shortfall faced by the Federal Board of Revenue in the first quarter of the current fiscal. The government is using petrol and HSD products as a tool to generate most of the revenue because of their massive consumption. Total HSD sales are touching 800,000 tons per month against monthly consumption of around 700,000 tons of petrol. The sales of kerosene and LDO are generally less than 10,000 tons per month, they maintained.

Copyright Business Recorder, 2019