ISLAMABAD: Prices of all major petroleum products are expected to rise 8-10 rupees on Monday over the next two weeks, mainly due to higher international oil prices, the application of additional oil levies and currency devaluation.
In the international market, import orders from oil marketing companies have lifted the benchmark crude oil price from $95 per barrel to $99 a barrel over the past two weeks, while the exchange rate has declined slightly.
According to the sources, it was calculated that the price of gasoline (automobile gasoline) and high speed diesel (HSD) would increase by around Rs5.60 and Rs4.50 based on the existing tax rates, import-based prices and exchange rates. each per liter. Similarly, kerosene and diesel (LDO) prices are estimated to have risen by Rs 4 and Rs 3.70 per liter, respectively.
At the beginning of February 15, the government, in line with its commitments to the International Monetary Fund (IMF), increased the oil levy on all petroleum products to Rs 4 per liter and lowered the sales tax rate on all products to zero to contain the impact of inflation.
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If the government decides to continue raising the oil levy by 4 rupees per liter each month, the warehouse price increase for gasoline is estimated at around 9.60 rupees per liter, followed by HSD at 8.50 rupees.
An official said the prime minister may want to delay further hikes, but with the next quarterly review of the IMF program just weeks away, his economic team wanted to follow the trend in international oil prices along with all existing taxes. Keep the course.
Current general sales tax is zero on 17% general GST on all major products including gasoline, HSD, kerosene and LDO. This is because the government cut GST on key products slightly in January and lowered it to zero earlier this month.
However, the government is raising the rate by 4 rupees on the 1st of every month, except this month, as part of a promise to raise it to 30 rupees per liter with the IMF. Currently, the government imposes an oil levy of 17.92 rupees per liter of gasoline, HSD 13.30 rupees, LDO 9.50 rupees, kerosene 5 rupees, and high-octane blends 30 rupees per liter.
The current factory price for gasoline is Rs159.86 per liter and the price for HSD is Rs147.83 per liter. Gasoline is mainly used for private cars, small cars, rickshaws, and two-wheeled vehicles and has a direct impact on the budget of the middle and lower classes, while HSD prices are mainly used for large trucks, so it is judged that the inflation rate is high. Trains and agricultural engines, such as threshers.
Currently, the factory price of LDO is 123.97 rupees per liter, and the price of kerosene is 126.56 rupees per liter. LDO is consumed in mills and a few power plants, while kerosene is mostly mixed with gasoline from unscrupulous elements and to some extent used for lighting in very remote areas.
Gasoline and HSD are the two main products that generate most of the revenue for governments, as they are large but still have growing consumption in the country. Average gasoline sales reach 750,000 tonnes for a monthly HSD consumption of approximately 800,000 tonnes. Sales of kerosene and LDO are typically less than 11,000 and 2,000 tonnes per month respectively.
Under the new mechanism, the government revises oil prices every two weeks to pass international prices posted on Platt’s Oilgram, instead of the previous monthly calculation mechanism based on the cost of imports from Pakistani state-owned stocks.
Posted at Serb on February 26, 2022