Questions worth billions

Here's question 1: Why is the price of diesel in Pakistan at Rs80.10 per liter? As of April 24, the international price of diesel stood at $16.27 per barrel. There are 159 liters in a barrel and that translates into Rs16.37 per liter as the international price of diesel. The difference between Rs80.10 (price in Pakistan) and Rs16.37 (the international price) is a wholesome Rs63.73 for every liter of diesel sold in Pakistan.

Yes, every government in the world has taxes on petroleum products and our government just doubled the petroleum levy on diesel from Rs15.49 a liter to Rs30 a liter. Then there’s the GST. Imagine: the international price of diesel is Rs16.37 a liter and our government has imposed Rs42 a liter worth of taxes. Are all of these taxes actually going into government coffers?

Question 2: Why is the price of petrol in Pakistan at Rs81.58 per liter? As of April 24, the international price of petrol stood at $8.06 per barrel. There are 159 liters in a barrel and that translates into Rs8.11 per liter as the international price of petrol. The difference between Rs81.58 (price in Pakistan) and Rs8.11 (the international price) is a wholesome Rs73.47 for every liter of diesel sold in Pakistan. Our government just jacked up the petroleum levy on petrol from Rs17.16 a liter to Rs23.76 a liter. Then there’s the GST. Imagine: the international price of petrol is Rs8.11 a liter and our government has imposed Rs35.61 a liter worth of taxes. Are all of these taxes actually going into government coffers?

Question 3: Why is the ‘refinery price’ of diesel in Pakistan at Rs30.99 a liter when the international price of diesel is Rs16.37 a liter? Where is the difference going?

Question 4: Why is the ‘refinery price’ of petrol in Pakistan at Rs35.73 a liter when the international price of petrol is Rs8.11 a liter? The difference is huge. Where is the difference going?

Question 5: What on earth is the ‘Inland Freight Equalisation Margin (IFEM)’? Why are the buyers of petrol being charged Rs3.73 per liter just for transporting a liter of petrol? Manipulation under the IFEM runs into many many billions a year, every year. Where are these billions going?

Question 6: For the record: between 2006 and 2014, an amount of Rs289 billion was collected from the buyers of diesel in Pakistan under ‘deemed duty’. Where has that money gone?

Question 7: For the record, between 2004 and 2018, an amount of Rs810 billion was distributed out to oil companies as ‘price differential claims’. Who benefited?

Question 8: What is the ‘petrol price formula’? Someone is benefiting to the tune of Rs30 billion a year, every year.

On June 22, 2018 the chief justice of Pakistan said that he “wants to know how oil prices are decided in the country” and that Ogra should come up with a formula within 10 days. Our daily consumption hovers around 556,000 barrels a day (pre-corona) which means 88.4 million liters a day.or 32 billion liters a year. That makes the above questions worth Rs500 billion a year, every year.

The writer is a columnist based in Islamabad.

Email: farrukh15@hotmail.com Twitter: @saleemfarrukh