As the international crude oil market is showing an increase in rates, price of high speed diesel and petrol is likely to follow suit. It is expected that from the start of October, the prices will increase by Rs2 per litre on both, diesel and petrol.
The increase in diesel and petrol prices has been recommended by the Oil and Gas Regulatory Authority (OGRA) on Friday. OGRA submitted a report to the Ministry of Energy regarding the issue. However, action will be taken after the approval by the Prime Minister, which is expected today.
The report suggested an increase of Rs19.32 on kerosene oil, Rs2.35/litre for petrol, and Rs2.17 for high speed diesel. Price increase of Rs14.09 per litre for light diesel oil was also recommended in the report.
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Estimated figures
Looking at the aforementioned increase in prices, it is estimated that petrol will go from Rs71.50/litre to Rs.73.85/litre. High Speed Diesel will also increase from Rs77.40/litre to Rs79.57/litre from the start of Ocotber. The current price of kerosene oil is Rs44 which will go up to Rs63.32 per liter whereas Light Diesel Oil will be sold at a price of Rs58.09/liter instead of its current price i.e. Rs44 per liter.
In the recent past increase in price of international crude oil has made the government charge heavy taxes to consumers. As both of these fuels are used widely in Pakistan, consumers have to go along with the decision of such price hikes. However, the government is charging zero sales tax on the other two fuels; kerosene oil and Light Diesel Oil.
On the other hand, black marketers are selling kerosene oil at a much higher rate of Rs90-100. The existing price of kerosene oil is Rs44 and the government hasn’t increased it for a very long time which has somehow proved to be more beneficial for the black marketers. However, increase in prices of petrol and High Speed Diesel has really troubled the general public.
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The recommendation of a sudden and quite high increase in kerosene oil and LDO has been done after the application of full taxes. This is the reason why their prices seem to increase more than that of petrol and HSD.
Although the government is capable of balancing the increase in oil prices, it is still charging heavy tax on petroleum and HSD. Every month, the government is receiving Rs25 billion in general sales tax on petroleum products and Rs10 billion in the name of petroleum levy.
Moreover, petroleum consumer are already paying up to 38% more on oil and petroleum purchase due to poor management by the government and to balance the negative in government revenues.
2015-16 – Worst for petroleum consumers
Fiscal year 2015-16 had been the worst for petroleum consumers as they paid highest sales tax on these products, as reported by OGRA. During the 2015-16 period, Rs29.57 was paid in the name of sales tax while Rs6 per litre was paid as petroleum levy in HSD sales. Consumers also paid Rs15.22 per litre as sales tax on petrol, Rs12.21/litre on Light Diesel Oil and Rs13.18/litre on kerosene oil.
In the year 2016-17 there has been a bit of a recovery in taxes as the tax rate was cut down to Rs19.39 per litre on HSD. The current year witnessed a sales tax of Rs10.71/litre on petrol, Rs2.83/litre on kerosene oil and Rs4.64/litre for Light Diesel Oil.