Ministry for collecting oil levy, GST
A worker holds a nozzle to pump petrol into a vehicle at a fuel station in Mumbai, India, May 21, 2018. PHOTO: REUTERS
While cautioning about the widening current account deficit and mounting pressure on the country’s foreign currency reserves, the Ministry of Finance has called for resuming the collection of petroleum development levy and general sales tax (GST) from the consumers of petroleum products.
Sources told The Express Tribune that the finance ministry drew the attention of economic policymakers, in a recent meeting of the Economic Coordination Committee (ECC), to the subsidised fuel prices, which it said was consistently increasing the current account deficit and piling pressure on the foreign exchange reserves.
The ministry pointed out that it was also constraining the supply chain of petroleum products, which required a review of the subsidy policy and the resumption of petroleum levy and sales tax collection from the consumers.
The Finance Division supported the allocation of Rs52 billion to clear the price differential claims of oil marketing companies (OMCs) and refineries.
In the meeting, the petroleum secretary pointed out that there was a shortfall of Rs9.02 billion between the allocation for price differential claims and the actual claims. He requested for approving the release of the amount.
During discussions, the petroleum secretary and the Oil and Gas Regulatory Authority (Ogra) chairman said that the latest estimates put the price differential claims at Rs55.48 billion for May 1-15 compared to the earlier estimate of Rs52 billion.
The Petroleum Division told the ECC that crude oil prices had been going up in the international market since September 2020, resulting in a substantial increase in consumer prices of petroleum products in the country.
The then prime minister, however, announced a relief package on February 28, which pushed down the consumer prices of motor spirit (petrol) and high-speed diesel by Rs10 per litre each effective March 14 and also put a freeze on prices till the end of current fiscal year on June 30.
Read Govt jacks up prices of petrol, diesel by Rs30 per litre
Following the announcement, the petroleum levy and sales tax on petrol and diesel was brought down to zero. That triggered price differential claims from the OMCs and refineries, which were being released by the government in the form of subsidy.
The Petroleum Division also revealed that Rs100.47 billion had been earmarked and transferred to Pakistan State Oil’s (PSO) Asaan Assignment Account for onward payment to the OMCs and refineries for March and April (including price differential claims of previous period from November 1-4, 2021).
Ogra disclosed that because of the continuously rising crude oil prices in the international market, the price different claims, which were earlier projected at Rs102.28 billion for May, were now projected to rise to Rs118.60 billion.
The Petroleum Division stressed that Rs118.60 billion may be allocated through a supplementary grant for the disbursement of price differential claims to the OMCs and refineries, as per procedure approved by the ECC.
The ECC considered a summary submitted by the Petroleum Division titled “Reimbursement of price differential claims of oil marketing companies and refineries of Rs55.48 billion through supplementary grant” and decided to grant Rs55.48 billion to the OMCs and refineries for the first fortnight of May.
Published in The Express Tribune, May 27th, 2022.
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