OMCs selling luxury cars fuel RON-95 as 97

KARACHI: A few oil marketing companies (OMCs) have been selling research octane number (RON)-95 as high-octane blended component (HOBC) RON-97 to deceive consumers and earn a higher margin, industry sources said on Wednesday.

Government regulates the standardised import fuel RON-92, and notifies its price. It was subjected to petroleum levy and sales tax that plummeted to almost zero following the announcement by the government freezing the prices of petroleum till the next budget, the official said.

RON-95 and RON-97 are deregulated and it is up to the OMCs to fix their prices on their own. RON-97 is subjected to Rs30 petroleum levy and 17 percent GST whereas RON-95 was taxed like RON-92.

For several months, government charged low petroleum levy and sales tax on petrol, which came to almost zero after freezing of prices at the start of this month.

A leading OMC, which was importing RON-97 complained about its competitor that was importing RON-95 and selling it as RON-97 to avoid taxes.

However, after failure to grab government’s attention on the flouting, the complainant OMC also started importing RON-95 and began selling it as RON-97.

In most countries, RON-97 or higher was considered as HOBC but in Pakistan, RON-95 was also being sold under various brand names as HOBC.

A top executive of an oil firm told The News that RON-92, generally known as Super, was a regulated product for which petroleum development levy and sales tax were fixed by the government. These were subject to adjustments when the intent was to provide relief to the people.

Currently, there is petroleum development levy of Rs1.81/litre and zero sales tax applicable on RON-92 fuel because of the relief package announced by Prime Minister Imran Khan.

On the other hand, for HOBC RON-97 is deregulated. This means that the fuel can be sold at whatever prices are deemed fit by the OMCs. However, the government has fixed the petroleum development levy at Rs30/litre and full sales tax at the rate of 17 percent on the basis that owners of luxury SUVs and sports cars, who can afford these vehicles worth millions of rupees should pay extra if they want premium fuel.

This has left an anomaly with respect to HOBC RON-95 which was sold by some OMCs as RON-97. Because this is considered a deregulated product, OMCs charge a hefty premium on this product with a lot of money spent on advertising campaigns to attract customers

The official said that a leading OMC has jumped on to the RON-95 bandwagon and introduced not only an inferior product to the customers, but was also causing a loss to the government.

Approximately 200 million litres of HOBC (RON-95 and RON-97) are sold in the country every year. At the rate of Rs30/litre, Rs 6 billion should be collected in respect of petroleum development levy.