ISLAMABAD: The government on Saturday increased prices of petroleum products from 4.8 per cent to 11.8 per cent on the heel of increase in oil prices in the international market. Meanwhile, economic experts and politicians have started questioning price determination formula.
According to the Oil and Gas Regulatory Authority, the petrol prices have been increased by Rs 4.85 per litre or 5.8 per cent. The new effective rate from May 1st would be Rs 88.41 per litre. The government increased High Speed Diesel rates 4.8 per cent or Rs 4.42 per litre. The new effective rate is Rs 97.31 per litre.
Last month the government increased the petroleum products prices from 9 per cent to 13 per cent. The political parties like Muttahida Quami Movement and Pakistan Muslim League Nawaz faction have been raising the issue of reviewing the petroleum products determination formula. Now the independent economists have also criticized the government for charging tax on petroleum products.
At present, the government is charging four different taxes at various stages, further inflating the base price. They have proposed to the government to collect all the taxes at the landed price. The government collects customs duty at the landed price after adding the customs duty it collects sales tax at import stage.
After adding the sales tax in the already inflated price it collects special excise duties then it adds sales tax at the domestic stage. Over and above it charges petroleum levy on the inflated prices. Though the government refunds the sales tax charged at the import stage on products that the oil refineries sell directly but the consumers are subject to pay the end price at the inflated rates.
Last year the government collected Rs 351 billion on petroleum products, almost a fourth of FBR total collection. This year during the first half July to December the government has collected Rs 163.4 billion in taxes, says a recently released FBR report. According to the rough estimates the figure has crossed Rs 225 billion mark till March. It also contradicts the government claim that it has been paying subsidies on petroleum products.
According to the OGRA, the kerosene oil prices have been increased by Rs 5.60 per litre or 6.7 per cent. The new effective rate is Rs 89.7 per litre. The kerosene oil is largely consumed in the rural areas to cook food as an alternate to natural gas. Ironically, the urban population is enjoying cheap source for cooking food.
The government also increased the High Octane Blended prices by Rs 1.80 per liter or 1.8 per cent. The new HOBC per litre price is Rs 99.92. The government made highest increase in the prices of Light Diesel Oil by raising rates 11.8 per cent or Rs 9.32 per liter. The new rate is Rs 88.30 per litre.