Here's how much more Pakistani oil consumers are paying than global prices

Heavy taxes have severely hit transport and agriculture sectors

ISLAMABAD: Following the dip in global crude oil prices, the government has burdened petroleum consumers with heavy taxes, especially those relying on petrol and high-speed diesel, which are widely used in cars, heavy vehicles and agriculture machinery.

Consumers have been paying up to 38% higher price for petroleum products compared to prices prevailing in the international market as the government struggles to make up for the revenue shortfall.



Among petroleum products, diesel is consumed the most and it is extensively used in the agriculture and transport sectors. Its high price hurts farmers and triggers an increase in inflation as passenger travel and goods transportation becomes expensive.

According to a report prepared and sent by the Oil and Gas Regulatory Authority to the Economic Coordination Committee, the previous fiscal year was the worst for Pakistan’s oil consumers during which they paid the highest rate of general sales tax (GST) on diesel.

Consumers paid up to Rs29.57 in GST on every litre of diesel during 2015-16 along with Rs6 in petroleum levy, the report revealed.

They also paid up to Rs15.22 in GST on per litre of petrol, Rs13.18 per litre on kerosene oil and Rs12.21 per litre on light diesel oil (LDO), which were the highest tax rates charged for a few months.

Owing to increase in global crude oil prices later, the tax on diesel was reduced to Rs19.39 per litre in the current fiscal year when the government tried to absorb some of the hike in crude prices to provide relief to the consumers.

In the current year, the highest rate of GST on petrol was Rs10.71 per litre, kerosene oil Rs2.83 and LDO Rs4.64.

In 2013-14 when the current government came to power, the maximum rates of GST were Rs16.96, Rs16.45, Rs15.71 and Rs14.71 per litre on diesel, petrol, kerosene oil and LDO respectively.



The increase in prices of petrol and diesel directly affects consumers. For example, in Punjab, gas supply to compressed natural gas (CNG) retail outlets had been stopped for a couple of years. Since petrol is an alternative fuel, motorists have switched to this source and its demand has gone up in the province.

Overall, the government is collecting over Rs25 billion in GST on petroleum products and Rs10 billion in petroleum levy every month.

Published in The Express Tribune, March 25^th, 2017.

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