ISLAMABAD: The federal government has slashed the price of petroleum products up to 3.4 per cent “to provide relief to the consumers”. According to an official statement issued on Saturday, the new prices will come into effect from Sunday, December 1, 2019.
The Oil and Gas Regulatory Authority (Ogra) had recommended to reduce price of Light Diesel Oil (LDO) — an industrial fuel — around Rs2.9 per liter or 3.4 per cent.
Rs2.4 or 1.9% reduction was recommended for diesel, which is primarily used in transport vehicles and benefits the industrial sector as well in transporting import and export goods, especially cement, steel, bricks and others.
The regulator had recommended a nominal reduction in the prices of petrol by Rs0.25 or 0.2 per cent and Rs0.83 which is 0.9 per cent cut in kerosene oil.
The government decided to pass on full relief to the consumers in line with the recommendations of the regulator. Following the notification, the price of petrol has come down from Rs114.24 to Rs113.99 per litre, whereas diesel will now be available at Rs125.01 per litre against Rs127.41 per litre.
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Similarly, LDO, which is mainly used for industrial purposes, will go down to Rs82.43 from Rs85.33 per litre whereas, kerosene oil price has been reduced from Rs97.18 to Rs96.35 per litre.
The government charges 17% general sales tax (GST) on all petroleum products. Apart from that, petroleum levy is also collected from consumers on the sale of these products.
At present, the government is receiving Rs18 per litre in petroleum levy on diesel, Rs15 on petrol, Rs6 on kerosene oil and Rs3 on light diesel oil.
The previous government of Pakistan Muslim League-Nawaz (PML-N) had collected petroleum levy in the range of Rs3 to Rs10 per litre. However, at that time, the GST was higher than the current rate.
Since the GST collection is transferred to provinces, the current federal government, keeping in view its high revenue requirement, has slashed the GST rate and raised the petroleum levy to collect more for the national kitty.
It is worth mentioning that the Brent oil price in international market on November 29 was $62.9 per barrel, while on October 30, its price was $61.15 per barrel, on September 27 ($62.22/barrel), August 30 ($60.14) and on July 30, it was $64 per barrel. Earlier in April and June, it was hovering near $72/barrel.