The federal government has increased petroleum levy on High Speed Diesel (HSD) by 98 percent, 17 percent on Kerosene Oil (SKO) and on Light Diesel Oil (LDO) by 94 percent projected to generate Rs 36.199 billion for the first fortnight of December (1-15).
The petroleum levy on petrol remained unchanged as it was already at the highest level possible under current legislation – at Rs 50 per litre.
The Oil and Gas Regulatory Authority (Ogra) had recommended a decline in prices of all petroleum products as follows: price of petrol by 32 paisa, HSD by Rs 13.73 per litre, SKO by Rs 11.03 per litre and LDO by Rs 14.99 per litre with effect from December 1, 2022.
Currently, the general sales tax (GST) on all petroleum products is zero however in the contingency plan agreed with the International Monetary Fund in the seventh/eighth review the government has pledged to raise sales tax up to 17 percent if the government fails to meet the revenue target for even one month. It has not been clarified whether this refers solely to FBR revenue or whether non-tax revenue is included.
Against the recommendation of the Oil and Gas Regulatory Authority (Ogra), the PL rate on HSD has been enhanced by Rs 25 per litre from Rs 12.59 per litre, PL on SKO has been increased from Rs 5.98 per litre to Rs 7.01 per litre and PL on LDO has also increased from Rs 7.50 per litre to Rs 15.39 per litre.
The government considered and approved the proposal of Petroleum Division. The Petroleum Division recommended that the prices of SKO and LDO may be reduced by Rs 10 per litre and Rs 7.50 per litre respectively through adjustment in PL rates while the price of petrol and HSD may be maintained at the existing level by adjusting PL rates and enhancing oil marketing companies (OMCs) margin on petrol and HSD by 32 paisa per litre and Rs 1.32 per litre. The government is projecting to generate Rs 25.9 billion from petrol, Rs 10.1 billion from HSD, Rs 36 billion from SKO and Rs 16 billion from LDO after increase in PL rates in first half of December. A target of Rs 31.1 billion was set for last half of November.
It has been assumed that the consumption of petroleum products in second fortnight of November and first fortnightof December would remain unchanged with petrol (92 Ron) consumption of 382,120 metric tons, HSD 340,855 metric tons, SKO 4,000 metric tons and LDO 925 metric tons.
The budgeted revenue from petroleum levy in the current fiscal year 2022-23 is Rs 750 billion however in the first quarter of the current year the government collected only Rs 47.476 billion under this head or 6 percent of the budgeted collection.
In another recommendation based on 17 percent GST and Rs 50 per litre PL on all petroleum products, the Ogra worked out an increase of 29 percent in HSD, 17.1 percent on petrol, 37.1 percent on SKO and 34 percent on LDO for two weeks.