Govt reduces petrol prices by Rs1.50/litre

ISLAMABAD: The government has reduced the prices of petrol, high-speed diesel and kerosene by Rs1.50/litre and light-diesel oil by Rs1/litre for the next fortnight, according to a notification issued by the Finance Division on Tuesday.

The new prices of petroleum products will be MS petrol, Rs118.30; HSD, 115.03; kerosene, 86.80; and LDO, Rs84.77. The new prices will be implemented from September 1 to 15.

The Oil and Gas Regulatory Authority (Ogra) on its calculations based on the international oil prices recommended a decline of Rs3.50 in petrol, Rs5 in HSD, Rs3 in kerosene and Rs2 in LDO. The Ogra summary on pricing is based on the existing petroleum levy and general sales tax rates and import parity price.

However, according to sources in Ministry of Finance, the full benefit is not passed on to the consumers because the ministry has to recoup some of the revenue loss it had allowed early this month through reduction in the tax rates.

As of now, the government is charging 17 per cent general sales tax on HSD; followed by 10.54 per cent on petrol, 6.70 per cent on kerosene and 0.20 per cent on light diesel oil. The standard GST rate is 17 per cent, which means the government was foregoing significant revenue flow.

The government is also charging a negligible Rs2.05/litre petroleum levy on HSD and 24 paisas/litre on light-diesel oil and zero per cent on petrol and kerosene. This means the government was also losing substantial revenue under the federal tax.

Until last year, the government used to charge up to Rs30/litre petroleum levy on HSD and petrol and Rs6 toRs8/litre on kerosene and light-diesel oil.