Petroleum development levy jacked up to Rs9.62/litre

KARACHI: Government has raised the petroleum development levy (PDL) from Rs5.62 to Rs9.62 on petrol, which jacked up the price of the product to Rs145.82 from Rs137.79 per litre.

To justify the spike in PDL, the government has reduced the sales tax (ST) on ex-refinery price by bringing it down from Rs8.82 to Rs2.06 in the latest revision of the prices of petroleum products in the country.

“This the lowest ST on petroleum products since 2009,” Muzzamal Aslam, Spokesman to Finance Minister Shaukat Tarin stated in a tweet and challenged two major opposition parties Pakistan Muslim League-Nawaz (PML-N) and Pakistan Peoples’ Party (PPP) to prove him wrong.

However, the industry people and economists do not subscribe to the claim of the government and believe that apart from global prices of oil, the local factors, particularly exchange rate and taxation on import stage of crude and refined products was also contributing immensely to the growing prices of petroleum products in the country.

“Yes, the global price of crude oil is a reason for the price hike of petroleum products in the domestic market, however the taxation on import stage and exchange rate is making the commodity costlier for the domestic consumers,” economist Dr Ikramul Haq said.

Zahid Mir, Chairman, Oil Companies Advisory Committee (OCAC) said that global prices of crude have played a part in pushing up the domestic prices, however exchange rate was also playing havoc by making the products costlier, with taxation on import stage adding on to it.

Mir explained that what the government was telling about the taxation on petroleum products was only about the ex-refinery products. “However, when crude oil is imported, 17 percent ST and 2.50 percent regulatory duty is charged on it. Likewise, on import of petrol and diesel, ten percent regulatory duty is slapped on.”

Dr Haq said that prices of crude oil in the international market were almost stable for the last one and a half month, but exchange rate fluctuation added enormously to it.Dollar touched all-time record level by crossing Rs175 in the market on October 28, 2021, which pushed up the average price of crude oil imported in last fifteen days of October.

He said that government increased PDL and reduced ST on petrol, which would hit the provinces as they were given share from federal divisible pool on the basis of ST collection. The economist said that under International Monetary Fund (IMF) condition, over Rs600 billion collections were made part of the federal budget and now government has raised it to meet this target.

Government is charging Rs9.62 per litre PDL on petrol, Rs9.14 on high speed diesel and Rs2.06 PDL on kerosene oil as per the latest price revision of petroleum products in the country.