In order to keep the POL [petrol, oil, lubricants] prices unchanged for the next fortnight, the government jacked up petroleum development levy (PDL) on high-speed diesel (HSD) by Rs2.50 per litre and increased it from Rs32.50 to Rs35 per litre with effect from January 16, 2023.
Under the IMF [International Monetary Fund] agreement, the government seeks Rs855 billion through petroleum development levy in the current fiscal year, 2022-23.
The government wants to maximise the PDL collection up to Rs50 per litre on all POL products, but so far it has been able to slap a maximum levy only on MS petrol.
In the first six months (July-Dec) period, the PDL collection was just around Rs200 billion. Now the government is asking the IMF for revising downward the PDL collection target by keeping it at approximately Rs500 to Rs550 billion maximum till the end of the ongoing financial year.
Dr Khaqan Najeeb, former adviser to the Ministry of Finance, said that prices of petroleum products had not been changed. The PDL has been increased by Rs3 to take it to Rs35, whereas it is maintained at Rs50 for petrol at the maximum level. This is in line with what the government has agreed with the IMF to raise the PDL up to April 2023 on both petrol and diesel to generate revenue of about 1 per cent of GDP for FY23.
He commented that interestingly, the Inland Freight Equalisation Margin (IFEM) has become negative by Rs6 for petrol and by Rs3 for diesel. This is probably a payment due from refineries to the freight pool. It’s an adjustment with the aim of keeping the prices unchanged, he added.
For MS petrol price of Rs214.80 per litre with effect from January 16, 2023, the ex-refinery price was fixed at Rs157.88. The IFEM is fixed at Rs6.08 per litre. The distribution margin is fixed at Rs6 per litre and the dealers’ margin at Rs7 per litre.
The PDL has been kept at Rs50 per litre but the general sales tax (GST) was kept at zero for the next 15 days. The worked-out price of MS petrol is kept unchanged at Rs214.80 per litre.
In case of high speed diesel (HSD), the ex-refinery price was fixed at Rs184.01 per litre with effect from January 16, 2023 against Rs184.11 per litre on January 1, 2023. The IFEM is kept at Rs3.21 per litre with effect from January 16, 2023 against Rs0.81 per litre from Jan 1, 2023, so the IFEM was kept at Rs2.40 per litre. The distributor margin and dealer margin were kept unchanged at Rs5 and Rs7 per litre respectively with effect from January 16, 2023.
The PDL on HSD was increased from Rs32.50 per litre to Rs35 per litre for the next 15 days, so that price for HSD was kept unchanged at Rs227.80 per litre with effect from January 16, 2023.