ISLAMABAD – The government has increased the prices of petroleum products claiming that it has passed on just the impact in the international market to consumers, but a careful glance reveals that it has benefited the most from the price increase since it is charging more petroleum levy and sales tax.
An official source told Pakistan Today that the government was likely to continue increasing POL prices in coming months to meet the budget deficit, since the government was trying to get back what it had lost in last three months by not raising petroleum prices because of political pressures.
Out of the total increase of Rs 7.23 per litre in petrol prices, the government would net Rs 4 per litre in petroleum levy (PL), while it would collect another Rs 1.75 per litre in sales tax. Similarly, the government would collect PL of Rs 9.8 per litre for HOBC as compared to the erstwhile Rs 4.8 per litre, an increase of Rs 5 per litre while another Rs 2.20 would be bagged in terms of PL for HSD as compared to the erstwhile Rs 0.55 per litre – a total increase of Rs 3.75 per litre, and a first-time levy of Rs 0.25 per litre for kerosene while LDO would remain levy-free as before.
Other than the PL, the government would also gain additional sales tax, which would go up to Rs 11.65 per litre for petrol from Rs 10.6 per litre – a rise of Rs 1.05, while another Rs 1.25 would be charged for HOBC, the price of which has gone up from Rs 12.59 per litre to Rs 13.84 per litre. The government would pocket another rupee per litre of kerosene, which has been raised from Rs 10.31 per litre to Rs 11.33 per litre.
The government had suffered a loss of Rs 13 billion in the last three months and if prices had not been increased in March, the deficit would have gone up by another estimated Rs 10 billion, the sources said. Even after raising petroleum prices, the government would still suffer losses of another Rs 5 billion, which would take the total deficit up to Rs 18 billion, the sources said, and in order to meet that deficit it would once again significantly raise POL prices next month regardless of the situation in the international market.
Petroleum prices were raised to appease an International Monetary Fund (IMF) delegation and to revive the suspended $11.3 billion Standby Arrangement facility, the sources said. The government had almost withdrawn subsidies in the power sector and only Rs 1.75 differential was to be bridged, they added.
