Friday, September 30, 2022

Petrol price hike by Rs14/liter – Brings Rs100bn profit to government in July

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ISLAMABAD: The caretaker government has increased the petrol prices on Sunday by Rs14/liter which will result in almost Rs100 billion profit to government in the month of July 2018.

In the past, price hike for petrol and related products was usually around Rs2 to Rs5. However, interim government’s decision to rise petrol prices by Rs5 to Rs14 per liter is a threat to people due to economic burden and instability.

It was expected that the caretaker government will maintain the prices in order to provide reprieve to the economy.

It is observed that interim government has deliberately connected the dots in order to attain Rs100 billion profit from public in July 2018, which are also in terms of assorted taxes including Inland Freight Equalization Margin (IFEM), companies, and trader margins etc.

The amount is allocated under different taxes and schemes, such as around Rs42 billion under the head General Sales Tax (GST), Rs17 billion under petroleum tariff, Rs8 billion as of customs duty, Rs5 billion under the umbrella of estimated ‘duty’ from the masses. Furthermore, Rs20 billion are to be collected in order to gave advantage to oil marketing companies (OMCs).

According to sources, “The Finance Ministry has already communicated to the Oil Marketing Companies (OMCs) regarding the hike in POL prices on 25th June while the ministry rejected a proposal to pass on a 50% hike to masses on late Saturday (30 June).”

The Supreme Court (SC) plays a vital role here, it is likely to give relief to the public through reducing taxes imposed on POL prices. Still under trial, it is expected that the SC will implement enormous cuts in taxes.

Furthermore, the apex court has taken a major step in reduction of taxes imposed on mobile cards of mobile phones, while the finance ministry and the federal board of revenue (FBR) are all set to collect additional amounts prior to a decision of relief to the public by the Supreme Court.

It is to be mentioned here that the climb in GST from 24% to 31%, has resulted in hike in price of HSD to Rs14/liter instead of Rs8/ liter, as the government was previously collecting 13% regulatory duty on diesel (HSD) and 5% customs duty on petrol.

Also the petroleum dealers around the country, except of the ten big cities of the country including Karachi, Lahore, Rawalpindi, Quetta, Peshawar, Faisalabad, Multan etc were already charging additionally from Rs2 to Rs4 per litre extra, and now this hike from government will pile up to the worries of a normal citizen.

OGRA (Oil and Gas Regulatory Authority) had projected an increase in the prices of petrol by Rs7.55 per litre, diesel by Rs14 per litre, kerosene oil by Rs3.36 per litre and light diesel oil by Rs5.92 per litre. But the government agreed on an immense trudge in the prices of POL products, setting new prices as of motor spirit 92 RON petrol at Rs99.5 per litre, high-speed diesel Rs119.31 and kerosene oil and light diesel oil at Rs87.7 and Rs80.9, respectively.

According to finance ministry, “The government has passed on the full impact of the increase to the consumers, the increase in the petroleum prices is caused due to the increase in petroleum prices in the international market and depreciation of the rupee against US dollar.”

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