As the prices of crude oil fluctuate globally, oil prices are expected to increase up to Rs13/liter from 1st April. On Thursday, Oil and Gas Regulatory Authority (OGRA) suggested the federal government to increase the petroleum prices from 1st April. Approval status will be confirmed on Friday.
Cost of Petroleum Products
According to the sources, OGRA has suggested the following increase in prices of petroleum product:
- Rs28 per liter for petrol (motor spirit)
- Rs4 per liter for high-speed diesel (HSD)
- Rs13 per liter for kerosene oil (superior)
- Rs75 per liter for light diesel oil (LDO)
In this regard, Ministry of Petroleum and Natural Resources has received a summary. As per the summary, after 1st April, petrol will be sold at Rs75.28 per liter and HSD will be sold at Rs84.04 per liter.
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As a result of this price revision, the cost of kerosene oil will increase from Rs44 to Rs57 per liter and LDO will rise to Rs51.75 from Rs44 per liter.
As the government is still collecting heavy taxes on petroleum, the impact of rising crude oil prices in the international market could easily be borne at the government level. Approximately Rs25 billion are collected every month by the government in lieu of GST on petroleum products and Rs10 billion on petroleum duty.
In effect of these heavy taxes, Pakistan’s consumers have been paying high prices to overcome the shortfall in government revenue. As compared to the global market, consumers in Pakistan have been spending more than 38% on oil.
GST on Petroleum Products
OGRA submitted a report to the Economic Coordination Committee (ECC) of the cabinet. The report stated that in the fiscal year 2015-16, Pakistani oil consumers paid the highest sale tax on HSD. It shows that HSD is the highest consumed product in Pakistan as compared to other petroleum products.
According to the report, in addition to Rs6 per liter in petroleum products, government collected GST up to Rs29.57 per liter on HSD during 2015-16.
The government also collected GST up to Rs15.22/liter on petrol, Rs13.18/liter on kerosene oil and Rs12.21/liter on LDO. For a period of few months, these high rates were charged to the consumers.
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In 2016-17, after the global increase in oil prices, the government eased the consumers by reducing the tax rate to Rs19.39 per liter on HSD.
GST on petrol dropped to Rs10.71 per liter, kerosene oil Rs2.83 per liter and LDO Rs4.64 per liter, during the year.
Rs16.45 on petrol, Rs16.96 on HSD, Rs15.71 on kerosene oil and Rs14.71 on LDO were the highest GST rates charged in 2013-14.
Petrol and diesel are the highly consumed products that are being used in heavy vehicles and in agriculture. Hence, the farmers are directly affected by the increasing cost of diesel. It also affects the cost of transportation which is the major cause behind rising inflation.
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