Latest news with #IFEM
Business Recorder
4 days ago
- Business
- Business Recorder
Petrol price increased, diesel's unchanged
ISLAMABAD: The price of petrol has been increased by Rs 1.00 per litre to Rs 253.63, effective from June 1, 2025, as announced by the Finance Division on Saturday. However, the rate for high-speed diesel (HSD) will remain stable at Rs 254.64 per litre for the next two weeks. According to a late-night statement from the Finance Division, this adjustment follows the advice of the Oil and Gas Regulatory Authority (OGRA) and relevant government bodies. While the ex-refinery price of petrol is increased from Rs 151.80 to Rs 154.55 per litre, the government mitigated the full impact on consumers by significantly reducing the Inland Freight Equalization Margin (IFEM) from Rs 6.30 to Rs 4.55 per litre. The petroleum levy (PL) on both petrol (Rs 78.02 per litre) and HSD (Rs 77 per litre) remains unchanged. Additionally, the price of kerosene oil has seen a slight increase from Rs 250.14 to Rs 251.13 per litre. Copyright Business Recorder, 2025
Business Recorder
15-05-2025
- Business
- Business Recorder
Hike in prices of petrol, diesel likely
ISLAMABAD: The government is expected to approve an increase of over Rs 4 per litre in the price of petrol (MS) and diesel, aiming to generate Rs 35 billion. The funds will support oil refineries, address sales tax challenges, and raise the profit margins of Oil Marketing Companies (OMCs). According to official documents, petroleum products— including petrol, diesel, kerosene, and light diesel oil (LDO) —have been classified as 'exempt' under the Finance Act 2024–25. As a result, input sales tax has become a cost for refineries and OMCs, totalling an estimated Rs 35 billion for the fiscal year, which cannot be recovered through product prices due to government regulations enforced by the Oil and Gas Regulatory Authority (OGRA). A draft proposal to levy a 3–5% sales tax on petrol and diesel was developed in consultation with the oil industry, the Ministry of Finance, and the Federal Board of Revenue (FBR). However, it was shelved due to the absence of an agreement with the International Monetary Fund (IMF) on allowing reduced GST rates for these products. Govt cuts petrol, diesel prices by Rs2 per litre for next fortnight Sources noted that applying the standard 18% GST would result in a price hike of approximately Rs 45 per litre— an increase considered politically and economically unfeasible. Any adjustment to the sales tax rate would require IMF approval and endorsement from Parliament. In parallel, OMCs and petroleum dealers have sought increases in their per-litre margins on petrol and diesel. To support the sustainability of the oil supply chain, OGRA has recommended raising the margins by Rs 1.13 for OMCs and Rs 1.40 for dealers. OGRA's recommendations have been reviewed, and certain amendments have been suggested in the summary. To partially address the financial challenges faced by refineries, OMCs, and dealers, the following proposals have been submitted for ECC's consideration: (i) since the petroleum products (Mogas, Diesel, Kerosene and LDO) are exempted from sales tax during current financial year, the refineries and OMCs' unadjusted sales tax during July 2024- June 2025 on these products may be compensated through Inter Freight Equalisation Margin (IFEM) estimated Rs.34 billion. The amount may be recovered in 12 months and recovery of this item will cease from the 13th month automatically; (ii) for FY 2025-26, 3-5% sales tax on above mentioned products may be imposed through Finance Act; however, in case the products remain exempted from sales tax in the FY 2025-25, the unadjusted sales tax may continue to be compensated through IFEM as a fallback option to keep the oil supply chain sustainable; (iii) the margins of OMCs and Petroleum Dealers may be enhanced to keep their business sustainable; and (iv) OGRA will develop a mechanism for adjustment of GST claims for above period and effective utilisation of digitisation cost along-with implementation timelines within one month of approval. Full cost of the digitisation will be borne by OMCs throughout the oil supply chain including outlets. The indicative impact on prices of MS and SHD will be as follows: (i) Refinery & OMCs 'unadjusted Sales Tax Rs. 28 billion for July-April, 2024 -25 and Rs 6 billion for May-June, 2025, impact Rs 1.87 per litre for 12 months; (ii) OMCs Margins (including-digitalization cost) Rs 1.13 per litre; and (iii) Petroleum Dealers Margin, Rs 1.12 per litre. The total impact will be Rs 4.12 per litre. The Government is likely to increase Attock Refinery Limited's (ARL's) freight charges by 30 per cent to Rs 1,490/ per barrel from Rs 1,143.95 per barrel for transportation of condensate as the key oil transporting companies have declined to accept the existing rate. Copyright Business Recorder, 2025
Business Recorder
01-05-2025
- Business
- Business Recorder
Petrol, HSD prices slashed
ISLAMABAD: Federal government has decided on Wednesday to reduce the ex-depot rates of petrol and high speed diesel (HSD) by Rs 2 per litre each for fortnight starting from May 1, 2025. In a notification, Finance Division states, 'The government has decided to revise the prices of petroleum products for the forthcoming fortnight, based on the recommendations of OGRA & the relevant ministries'. The new price of petrol has come down from Rs 254.63 to Rs 252.63 per litre and HSD rate has also revised down ward from Rs 258.64 to Rs 256.64 per litre. The decline in crude oil prices has marginally translated into lower costs for petroleum products in Pakistan. However, the government's recent decision to abolish the Fifth Schedule—previously a mechanism that limited the petroleum levy to a maximum of Rs 70 per liter has raised questions about whether the full benefits of lower crude prices will be passed on to consumers. The government is charging Rs 78.02 per litre PL on petrol and Rs 77.01 per litre on HSD. The IFEM rate has revised downward from Rs 6.89 to Rs 6.30 per litre but OMC's margin has kept unchanged at Rs 7.87 per litre and dealer margin at Rs 8.64 per litre. Kerosene Oil price has raised from Rs 250.14 to Rs 252.13 per litre with effect from May 1, 2025. Copyright Business Recorder, 2025
