If oil prices do not fall in the global market, petrol could reach Rs 170 to Rs 180 per liter by June 2022, according to estimates.
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| Pakistan consumes about 20 billion liters of petroleum products annually (AFP file photo) |
Falling oil prices in global markets have raised hopes among the people that it will also have a positive impact on the Pakistani market.
Global oil prices fell 10 percent a day after a new strain of the coronavirus was diagnosed in South Africa, a lockdown in Germany and Austria, and the world powers announced the withdrawal of about 80 million barrels of oil from defense reserves.
Oil has fallen from about Ù‹ 82 a barrel to 73.45 a barrel. Whether it will benefit the people of Pakistan or not, an official of the Ministry of Petroleum said on condition of anonymity that the coming days do not seem to bring good news because the government does not intend to provide relief to the people.
You can guess this from the fact that the government’s claim of zero petroleum levy on petroleum products is half true. Petroleum levy on petrol is zero but petroleum levy on diesel is still around Rs.
If we talk about a tax on petroleum products, sales tax of about Rs 26 per liter is being collected on petrol, and sales tax of around Rs 1 per liter is being charged on diesel. Despite making good profits, the government has announced an increase in the petroleum levy by Rs 4 per month, which is expected to continue till June 2022.
At present, the levy on petrol is zero which is targeted to increase to Rs. Hafeez Sheikh had agreed in March 2021 to increase the petroleum levy from Rs 5 to Rs 30. The budget presented in June 2021 showed an income of Rs. 601 billion in terms of petroleum levy.
Pakistan consumes about 20 billion liters of petroleum products annually. If it is multiplied by 30, it becomes 600 billion rupees. The government did not raise the levy despite promising and showing it in the budget. Now the IMF has given an ultimatum to increase the price.
Allegedly, the next installment of the loan will be received from the IMF after the increase of Rs 4 per liter from December 1. If oil prices do not fall in the global market, petrol could reach Rs 170 to Rs 180 per liter by June 2022, which will lead to a new storm of inflation.
Regarding the skepticism about the prices of petroleum products in Pakistan, I contacted Farrukh Saleem, the former government economic spokesman, who said that oil is sold in Pakistan 15 to 20 percent more expensive than the international market.
This increase is in addition to taxes. If this profit is accumulated in the government treasury then there is no problem in receiving it but the point of concern is that this profit goes into the pockets of oil distribution companies and some oil refineries.
The public is kept unaware of this information, while the government should keep a full account of everything from procurement of petroleum products to delivering to petrol pumps on a monthly basis. It is probably hidden for fear of exposing the mafia.
He said that according to the principle, it is not appropriate to control petroleum products at the government level. It is not the job of the government to fix oil supply and price rates and then sell it, it is the job of the private sector, as is happening in the US, UK, and even India.
Private companies import petroleum products of different quality and sell them at reasonable profits. In the United States, petroleum products of various standards and rates are available every two to three kilometers. Rates vary at almost every pump. Cheaper petrol is available due to the competitive atmosphere.
Petroleum companies should be allowed to do business on the same principle that mobile network companies are operating on. Mobile call rates in Pakistan are much lower than in the world mainly due to the competitive atmosphere.
The solution proposed by Farrukh Saleem Sahib seems viable but for that, the government must be interested. Currently, the government is interested in increasing the profits of petrol pump owners.
Matters have been settled with the government’s Petroleum Dealers Association, under which the profit on petrol has been increased by about 99 paise and on diesel by about 83 paise.
This will be effective from December 1. According to Abdul Sami Khan, chairman of the Petrol Dealers Association, it was inevitable that the government would increase the rate of profit. Petrol pump costs have risen in times of inflation, businesses cannot run at a loss. Our demand was for an increase of six rupees but we are satisfied that something has been increased.
Dealers are happy, the government is holding weddings but people are worried about rising oil prices again
There is also a public opinion that the protest was planned with the connivance of the government and the Petroleum Dealers Association and later the profits were increased in the name of controlling the situation, which will be paid from the pockets of the people. Û”
If the government is serious about solving the problems of the people in a real sense then stop the petrol pump owners from stealing petrol by increasing the profits. It is a common opinion that almost all petrol pumps lose weight. If profits are increased then fines should be increased and controls should be tightened.
In addition, instead of putting the burden of profits on the shoulders of the people, it can be met by reducing the sales tax. It is unknown at this time what he will do after leaving the post.
