05/02/2022
The oil industry has warned the government that maintaining product rates despite the escalating international prices will disrupt supply chains and increase the oil industry’s circular debt.
The Oil Companies Advisory Council (OCAC), which comprises more than two dozen oil refineries and marketing firms said, “Based on the critical condition of the industry and increasing trend in POL prices, we urge you to ensure that no further petroleum differential claim (PDC) is imposed on the industry as it will have an unmanageable impact on the cash flows of the industry and may also lead to catastrophic disruption in the POL supply chain”.
In the fortnightly oil price review scheduled on 31 January, Prime Minister Imran Khan had rejected the Ministry of Energy’s proposal to raise the prices of petrol and high-speed diesel (HSD) by Rs. 11 and Rs. 14 per liter respectively to forward the impact of the international prices to consumers.
Accordingly, the government removed the general sales tax on major petroleum products like petrol, high-speed diesel (HSD), kerosene, and light diesel oil (LDO), and by lowering the petroleum levy (PL) on petrol by Rs. 4.90 per liter and by Rs. 4.13 per liter on HSD.
Currently, there is no GST on all of these products, and the PL for petrol is Rs. 13.92 per liter, and that on HSD is Rs. 9.30 per liter. The PL on kerosene and LDO is Rs. 1 and Rs. 5.5 per liter respectively. This is despite the government’s promise to the International Monetary Fund (IMF) to hike the PL on petrol and diesel by Rs. 4 per liter every month until it reaches Rs. 30 per liter, which is the maximum permissible limit.
