The government on Wednesday absorbed the price-hike impact by making adjustments in sales tax and petroleum levy and raised the petrol price by Rs 2 per litre only.
As compared to the regional markets, the price of petrol in Pakistan still falls in the lowest tier, a Finance Ministry statement said.
The government announced a hike of Rs 2 per litre in the prices of MS Petrol; raising it to Rs 112.69 from 110.69 while it announced an increase of Rs 1.44 per litre in the prices of High-Speed Diesel (HSD), which would now be sold at Rs 113.99 compared to old price of Rs.112.55.
Likewise, kerosene (SKO) prices were increased by Rs 3.86 per litre, from Rs 81.89 to Rs 85.75 and Light Diesel Oil (LDO) by Rs 3.72 per litre from Rs 79.68 to Rs 83.40. The ministry said that as compared to the regional countries, the government was providing petrol and diesel at the lowest possible rates.
As of June 28, the statement added, the petrol was available at Rs110.6 per litre in Pakistan whereas it was being sold at Rs115.9 in Indonesia; Rs145.7 in Bhutan; Rs146.1 in Sri Lanka; 165.8 in Bangladesh; Rs169.1 in Nepal; Rs181.6 in China and at Rs214.1 in India
“In order to provide maximum relief to the consumers, the government has maintained the practice of keeping the prices of petroleum products at an affordable level,” the statement added.
It said that the Oil and Gas Regulatory Authority (OGRA) had been recommending a substantial increase in the prices of petroleum products since May 1st 2021, corresponding to the increase in prices of petroleum products in the international market.
However keeping in view the welfare of the general public, the government had absorbed the impact of the increase by making adjustments in sales tax and petroleum levy.
“Currently, the petroleum levy rates are at the lowest of last six years,” it said.
On June 16th 2021, OGRA pointed that prices of Petroleum Products in the international market had increased – by Rs. 4.27/ltr in Petrol, Rs. 3.58/ltr in HSD, Rs. 3.77/ltr in SKO, and Rs. 4.05/ltr in LDO.
However, the government did not pass on the full impact and only 50% increase was passed on to the consumer while it absorbed a loss of about Rs.1.86 billion through reducing correspondingly the GST and Petroleum Levy rates in order to provide relief and subsidy to the consumers by keeping the prices at an affordable level
According to the statement, during the financial year 2020-21, the government provided Rs252.41 billion subsidy to the consumers by keeping low the petroleum levy rates against the budgeted Rs 30/litre on all products.