Pakistan govt pockets 33pc profit on petrol price

KARACHI, September 19 (Internews): The Pakistan government is pocketing 33 per cent in the shape of various levies on actual sale price of motor gasoline at Rs81.66 per litre, and on the high-speed diesel (HSD), it is charging Rs9.40 per litre as sales tax on actual price of Rs68.14.

However, the price differential claim (PDC) on diesel has come down to Rs9.24 per litre but the government has managed to balance out its revenue and payables.

The government levies on petrol amount to Rs11.26 per litre with sales tax, coupled with Rs15.89 as petroleum development levy (PDL) on the sale price of Rs81.66 per litre. In the previous fortnight, the shares of PDL and GST were Rs19.65 and Rs11.95 per litre, respectively.

Despite a sharp decline in crude oil prices to $95 per barrel from peak $147 level few months back, consumers are yet to benefit from the sharp plunge.

Market people and the industrialists have expressed disappointment over Rs5 per litre reduction in petrol price. The diesel price has been increased by Rs3.50 per litre.

Acting president of Federation of Pakistan Chambers of Commerce and Industry Zubair Tufail had urged the government to reduce the petrol price by at least Rs10 per litre so that the consumers could get the right benefit at a time when power charges had been enhanced by 30-50 per cent followed by 31 per cent increase in gas prices.

He said that the government should announce another price cut of Rs5 in petrol on October 1.

When secretary-general of Oil Companies Advisory Committee Dr Ilyas Fazil was asked as to how petrol and diesel prices could come down, he said that the government had been protecting consumers before July 2007 by not passing on the steep rise in international prices rising up to $147 per barrel.

This was done by maintaining end price the same and creating the element of price differential claim (PDC), which meant that the oil-marketing companies and the refineries were not being paid the real value of the product but were paying for the subsidy allowed by the government, he said. Even now, he said, the government owes Rs80 billion to the oil industry.

Despite the fact that world oil prices had come down, the government’s stated priority is reduction/elimination of the subsidy. It is for the reason that the due benefit has not been passed despite oil prices are substantially coming down since July 2008.

Dr Ilyas recalled that few years back the government had started passing on the price fortnightly in line with international movement of price both ways. “We still recommend the government to do the same and it will happen most probably once the PDC element is eliminated,” the OCAC secretary general said.

Pakistan had imported four million tons of diesel in 2006-07 and the local production was recorded at 3.2 million tons. In 2007-08, diesel imports were 4.6 million tons and the local production stood at 3.6 million.