Latest news with #PetroleumProducts
Express Tribune
21-05-2025
- Business
- Express Tribune
Increase in petroleum levy in the offing
Listen to article The government has decided to make a massive increase in petroleum levy up to Rs90 per litre on the sale of oil products, which will be collected from consumers. "The federal government, in exercise of powers conferred under Section 8 read with Section 3(1) of the Petroleum Products (Petroleum Levy) Ordinance, 1961, authorises the Petroleum and Finance Divisions to make adjustments – with the approval of the prime minister — in the rate of petroleum levy on petroleum products, up to a maximum of Rs90 per litre, to ensure timely fortnightly revisions in petroleum prices," the Economic Coordination Committee (ECC) said in a recent meeting. At present, the consumers are paying Rs78 per litre in petroleum levy on petrol and Rs77 per litre on diesel. During previous decisions relating to revision in petroleum prices, the federal government had decided to redirect the collection of petroleum levy to subsidise electricity consumers and finance road and canal projects in Balochistan. The decision was taken while discussing matters pertaining to sales tax on refineries and oil marketing companies (OMCs). The Petroleum Division briefed the forum that petroleum products (Mogas, diesel, kerosene oil and light diesel oil) had been classified as "exempted" under the Finance Act 2024. As a result, the refineries and OMCs incurred the cost of input sales tax (Rs34 billion for financial year 2024-25), which could not be recovered through product prices, which are regulated and fixed by the Oil and Gas Regulatory Authority (Ogra). A proposal to levy 3-5% sales tax on motor spirit (MS or petrol) and high-speed diesel (HSD) was developed in consultation with the oil industry, Finance Division and Federal Board of Revenue, but it could not be implemented due to the lack of agreement with the International Monetary Fund (IMF) on reducing the tax rate. It is worth noting that the standard general sales tax (GST) of 18% on MS and HSD will result in a price rise of around Rs45 per litre, which is not desirable. Any changes to the tax rate will require prior consultation with the IMF as well as approval of parliament. Besides the sales tax issue, the OMCs and petroleum dealers requested an increase in their margins on MS and HSD. In that regard, Ogra recommended an increase of Rs1.13 and Rs1.40 per litre in margins of OMCs and dealers, respectively, to ensure the sustainability of oil supply chain. Ogra's recommendations were reviewed and certain amendments were suggested in a summary. To partially address the financial issues faced by refineries, OMCs and dealers, the Petroleum Division proposed that since petroleum products (Mogas, diesel, kerosene oil and LDO) were exempt from sales tax during the current financial year, the unadjusted sales tax of refineries and OMCs (estimated at Rs34 billion) from July 2024 to June 2025 may be compensated through the inland freight equalisation margin (IFEM). The amount may be recovered over 12 months. It said that for FY26, a 3-5% sales tax on the above-mentioned fuel products may be imposed through the Finance Act. However, if the products remain exempt from sales tax, the unadjusted tax may again be compensated through the IFEM as a fallback option to keep the oil supply chain sustainable. Ogra will develop a mechanism for adjusting GST claims and ensure effective utilisation of digitisation costs, along with implementation timelines, within one month of approval. The full cost of digitisation will be borne by the OMCs across the supply chain, including the retail outlets. The Petroleum Division briefed the ECC that based on those proposals the indicative impact on MS and HSD prices would be Rs1.87 per litre for sales tax adjustment. It was also proposed to increase margins for OMCs by Rs1.13 per litre and for dealers by Rs1.12 per litre. The ECC considered a summary titled "Settlement of financial issues of refineries and OMCs" and agreed that the unadjusted FY25 sales tax of OMCs and refineries may be compensated from May 16, 2025 through the IFEM (which was estimated at Rs34 billion and would be verified by Ogra). The amount will be recovered until the end of FY26. The proposal for the imposition of 3-5% GST on petroleum products shall be considered along with other tax-related proposals for inclusion in the upcoming Finance Bill.
Express Tribune
17-04-2025
- Business
- Express Tribune
No petrol relief
Listen to article Despite a steep fall in international oil prices, there has been no relief for the masses in the country from the unbearably high prices of petroleum products. Local media was abuzz with reports of "good news coming up" in the form of a significant cut – of around Rs10 per litre – in the rate of petrol. But the official announcement after the fortnightly government review brought nothing but disappointment, as no relief was passed on to the consumers and the prices of all petroleum products were kept unchanged. Rather, the federal cabinet approved an amendment to the Petroleum Products (Petroleum Levy) Ordinance, 1961, effectively removing any upper limit previously imposed on the levy. In March and April, the government has already raised the levy from Rs60 to Rs80, with former finance minister Miftah Ismail calling it a "mini-budget that earned the government Rs34 billion each month in tax revenue". The justification that the Prime Minister has come up with on denying petrol price relief to the masses is nothing but bogus: that the money so saved would fund development in Balochistan, precisely to upgrade N-25 Highway that links Chaman to Karachi via Quetta, Kalat and Khuzdar, and to complete Kachhi Canal Phase-2 to irrigate land in Balochistan. This justification is rather misleading given that the federal government could have conveniently fund the said projects from the PSDP whose Rs1,100 billion allocation has only been utilised by less than 30 per cent in the first eight months of the ongoing fiscal year. Moreover, Bolochistan itself enjoy a surplus of approximately Rs450 billion. What appears to be the case is that the federal government is in for a shortfall in its revenue collection for the ongoing fiscal year, and is in fact trying to cut it to as low as possible by employing discreet revenue enhancing measures. Let's keep an eye on whether or not the two mentioned Balochistan projects see the light of day within two years. Well, Miftah believes they will not!
Express Tribune
15-04-2025
- Business
- Express Tribune
Petrol price to remain unchanged for next 15 days
Listen to article The federal government has decided to maintain current petroleum product prices for the next 15 days, according to a notification issued by the Ministry of Finance on Tuesday. As per the official statement, the price of petrol will remain at Rs254.63 per litre, while high-speed diesel (HSD) will continue to be sold at Rs258.64 per litre. Earlier, during a federal cabinet meeting chaired by Prime Minister Shehbaz Sharif, the cabinet approved an amendment to the Petroleum Products (Petroleum Levy) Ordinance, 1961, on the recommendation of the Petroleum Division. PM Shehbaz noted that although global oil prices have declined, the benefit will not be passed on to consumers. Instead, the government will utilise the savings for development initiatives in Balochistan. He announced that the province's most critical national highway would be upgraded to meet motorway standards and dualised to improve connectivity and infrastructure in the region.
Express Tribune
15-04-2025
- Business
- Express Tribune
Govt skips fuel price cut, redirects funds to Balochistan projects
Listen to article Despite a decline in global oil prices, the federal government has decided not to reduce domestic petroleum rates, choosing instead to allocate the savings to key infrastructure and development projects in Balochistan, according to a statement issued by the Prime Minister's Office (PMO) on Tuesday. Prime Minister Shehbaz Sharif, during a federal cabinet meeting, announced that the funds saved from the global oil price dip would be used to dualise the strategic N-25 Highway — the Chaman–Quetta–Kalat–Khuzdar–Karachi route. 'The initiative is aimed to provide better travel facilities to the people of Balochistan,' the statement read. The prime minister directed that the restoration and expansion of the highway should be carried out to meet full motorway standards. In addition, a portion of the funds will be allocated to complete Phase 2 of the Kachhi Canal, which is expected to irrigate hundreds of acres of agricultural land in Balochistan. Balochistan Chief Minister Sarfaraz Bugti, who attended the cabinet meeting, expressed his gratitude to Prime Minister Sharif for prioritising development in the province, particularly the N-25 project and other long-awaited infrastructure efforts. Meanwhile, the cabinet also approved an amendment to the Petroleum Products (Petroleum Levy) Ordinance, 1961, as recommended by the Petroleum Division. The PMO said the amendment is expected to contribute to boosting national revenue. The decision comes as global oil markets face instability. Brent crude dropped 54 cents to $64.34 per barrel, while US West Texas Intermediate fell 57 cents to $60.96, amid lowered demand forecasts from both OPEC and the International Energy Agency (IEA), largely due to escalating trade tensions and fluctuating US tariff policies. In its last price review, the government had marginally reduced petrol prices by Re1 per litre, fixing them at Rs254.63, while keeping High-Speed Diesel (HSD) at Rs258.64 per litre through April 15, as per the Finance Division's notification.
