ISLAMABAD: Based on the existing tax rates, the Oil and Gas Regulatory Authority (Ogra) has calculated an increase of approximately two percent in diesel prices and an insignificant reduction in the rate of gasoline for the month of February.
A government official said Dawn Ogra transferred a summary to the government on Thursday that contains calculations for oil prices based on the existing general sales tax (GST) rates and the oil rate. He said the Ministry of Finance would announce ex-deposit prices for petroleum products on January 31.
Based on the import parity price of the state of Pakistan oil for purchase in January, Ogra has calculated an increase of Rs2.47 per liter in the price of high-speed diesel (HSD) and Rs1.10 per liter in the light diesel (LDO). On the other hand, the regulator has calculated a reduction of six paisa and 66 paisa per liter in the prices of gasoline and kerosene oil, respectively.
As such, the HSD ex-deposit rate has been calculated at Rs129.73 per liter instead of Rs127.26, showing an increase of 1.9pc. Likewise, the ex-deposit price of LDO has been calculated at Rs85.61 per liter instead of the existing rate of Rs84.51, showing an increase of 1.3pc.
On the other hand, it has been proposed that the price of ex-tank gasoline should decrease to Rs116.54 per liter from the existing rate of Rs116.60, to 0.1pc. It has been proposed that the ex-deposit price of kerosene be reduced by 0.7pc to Rs98.79 per liter of the existing rate of Rs99.45 per liter.
The government has already increased the GST in all petroleum products at a standard rate of 17pc in all areas to generate additional revenue. Until January of last year, the government was charging 0.5pc GST in LDO, 2pc in kerosene, 8pc in gasoline and 13pc in HSD.
In addition to the 17pc GST, the government has more than doubled the rate of oil collection in HSD in recent months to Rs18 per liter instead of Rs8, while the gas tax also increased by 50pc to Rs15 per liter instead of Rs10. The oil rate on kerosene and LDO oil remains unchanged at Rs6 and Rs3 per liter, respectively.
In recent months, the government has increased oil tax rates to partially recover a significant income deficit facing the Federal Revenue Board. The collection remains in the federal kitten unlike the GST that applies to divisible group taxes and, therefore, the provinces seize a 57 percent stake.
Gasoline and HSD are two main products that generate the greatest amount of revenue for the government due to its massive but growing consumption in the country. Total HSD sales are reaching 700,000 tons per month against the monthly consumption of around 600,000 tons of gasoline. Kerosene and LDO oil sales are generally less than 10,000 tons per month.
Oil imports have plummeted by approximately 20 percent and local production has fallen by approximately 13 percent during the first half of the current fiscal year during the previous year due to higher prices, slower economic activities and other reasons.
Reference: Published on Dawn, January 31, 2020