ISLAMABAD:
Prime Minister Shehbaz Sharif on Friday jacked up prices of both high speed diesel and petrol by Rs27 per liter despite no increase was required in the rates of petrol and to push its price higher the premier imposed nearly Rs27 per liter more tax on fuel.
Accordingly, the high speed diesel price has been fixed at Rs380.2 per liter, up from Rs353.42 per liter. This marks 7.5% increase. Diesel prices are still significantly lower from their peak of Rs520.4 on April 10. The diesel is considered the most inflationary fuel due to its widespread use in freight transportation and agriculture sector.
The Prime Minister approved to increase petrol prices to Rs393.4 per liter, up from Rs366.6. This shows an increase of 7.3% over the existing prices. Petroleum Division officials said that there was no change in the petrol prices in the international market and the rates had to be jacked up due to increase in the tax.
The finance ministry spokesman was not available for comments.
The new petroleum levy rate on petrol has been fixed at Rs107.4 per liter, as Shehbaz Sharif again chose to recover the tax meant to be recovered from diesel consumers from the petrol consumers a policy that he had earlier implemented and then reversed after public backlash.
Last month, the prime minister had increased the petroleum levy rate on petrol to a record Rs160 per liter in the middle of skyrocketing prices. Later on, the premier took the credit to reduce the tax to Rs80.
The sources said that the International Monetary Fund has asked the government to start charging Rs80 per liter tax on diesel and petrol. Instead of introducing petroleum levy on high speed diesel, the PM in the first step has increased the tax on petrol to Rs107.4 per liter.
There is still a requirement by the IMF to further increase the tax by Rs53 per liter. The sources said that the government would take the decision next week whether the remaining Rs53 per liter tax should be recovered from the diesel or the petrol users.
The finance ministry sources said that the government has already collected little over Rs1.2 trillion in petroleum levy during the first nine months of this fiscal year. This is equal to 82% of the annual target of Rs1.468 trillion.
Yet, the government has chosen to further increase the burden on consumers of petrol, mostly poor motorcycle owners, and car owners belonging to the low middle income to the highest income groups.
The government of Prime Minister Shehbaz Sharif is trying to appease the users of diesels but may end up irritating both diesel and petrol consumers, as the prices were still on the rise for both the categories.
The government had earlier slashed the federal development budget by 17% or Rs173 billion to offset the impact of reduction in petroleum levy on diesel and partially subsidize the commodity.
The government is currently collecting about Rs36 per litre tax on diesel, including Rs33 in customs duty and Rs2.5 as climate support levy. Total taxes on petrol amount to Rs134 per litre, including Rs107 petroleum levy, Rs24 customs duty and Rs2.5 climate support levy.
As per the understanding with the IMF, the climate support levy would be further increased by Rs2.5 per liter on both the products, reaching to Rs5 per from July 1st.
The government functionaries have remained unable to convince the IMF to relax punitive conditions even during the war times. The demand to further increase the petroleum levy rates and the climate support levy show the lack of convincing power of the negotiators.
The IMF is expected to approve the fourth loan tranche and the third review of the $7 billion bailout package in the first week of May.
Due to reduction in the global prices, superior kerosene oil and light diesel oil rates have been reduced. Kerosene oil prices have been reduced from Rs429 per liter to Rs365 per liter. There is a reduction of Rs63.6 per liter in kerosene oil price. The government is charging Rs20.4 per liter petroleum levy on it.
The light diesel oil prices have been reduced from Rs299 to Rs270 per liter a reduction of Rs29 per liter. The price is inclusive of Rs15.8 per liter petroleum levy.
