ISLAMABAD: The federal government is contemplating a significant raise in petrol prices by up to Rs10 per litre, effective from April 1, 2024, further worsening the financial burden on the general public.

The recent surge in petrol prices is attributed to an increase in premium from $12.15 per barrel to $13.507 per barrel, marking a $1.45 per barrel increment.

In case the government passes on full impact on general masses ahead of Eid-ul-Fitr, the price of petrol would surpass high-speed diesel (HSD) price. It would rise from Rs279.75 to Rs289.75 per litre. Additionally, the Inland Freight Equalization Margin (IFEM) on petrol is expected at Rs5.01 per litre.

There may be a slight decrease of Rs1.30 per litre in the price of HSD, as the premium on HSD stands at $6.50 per barrel as in the last two reviews of petroleum products. IFEM is expected at Rs3.76 per litre on HSD.

Petrol prices may be hiked by Rs3.50

The prices of kerosene oil (KERO) and light diesel oil (LDO) are expected to remain unchanged at Rs188.66 per litre and Rs168.18 per litre, respectively.

The Oil and Gas Regulatory Authority (OGRA) will send its recommendation of petroleum prices on March 31, 2024, and the federal government will announce the price in light of the OGRA’s recommendations.

This rise in petroleum product prices is anticipated to occur without the proposed imposition of 18 percent general sales tax (GST). However, if the GST be levied, prices could surge by an additional Rs50 per litre on petrol.

Currently, the government imposes a petroleum levy (PL) of Rs60 per litre, amounting to 21.4 percent of the current petrol price of Rs279.75 per litre.

Again, if the government chooses to impose an 18 percent GST on HSD, the price could increase by Rs53 per litre from the current Rs285.70 per litre.

Since February 2022, the federal government has maintained a zero GST rate on petroleum products.

The International Monetary Fund (IMF) has been asking the government to remove sales tax exemptions on all items, including petroleum products.

An official from the Federal Board of Revenue (FBR) noted that there are currently no proposals under consideration to impose sales tax on petroleum products.

Nevertheless, the estimated revenue from an 18 percent sales tax on petroleum products could range between Rs21 billion to 25 billion per month, based on current consumption levels.

Copyright Business Recorder, 2024