In modern economies, energy-dependent nations usually bear the brunt of the ebbs and flows observed in the prices of petroleum products in the international market. In case of an economic meltdown, the situation becomes worse when an international monetary institution inflicts heavy taxes and duties on fuel prices. The same is the case with petrol prices in Pakistan.
In this piece, we’ll provide a detailed breakdown explaining how substantial taxes and duties are increasing the final retail prices of petrol, diesel, and other products in Pakistan.
According to media reports, duties, taxes, and other margins on petrol and high-speed diesel (HSD) were massive: Rs. 107.12 per litre and Rs. 104.59 per litre, respectively. Surprisingly, these figures are in addition to the ex-refinery prices of Rs. 148.51 per litre for petrol and Rs. 154.06 per litre for diesel.
Breakdown of the Tax Components
Further breaking these hefty numbers into petroleum development levy (PLD), custom duties, dealer commission, oil marketing companies’ margin and inland freight equalization margin, PLD comes out on top – Rs.70 per litre both for petrol and HSD. In latest price revision, the federal government increased levy from previous Rs. 60 per litre to the new Rs. 70 per litre.
Similarly, custom duties stand at Rs. 15.28 per litre for petrol and slightly higher of Rs. 15.78 per litre for HSD. Dealers receive a commission of Rs. 8.64 per liter, and oil marketing companies (OMCs) earn a margin of Rs. 7.87 per liter. Additionally, the inland freight equalization margin (IFEM) is set at Rs. 5.33 per litre for petrol and Rs. 2.30 per litre for HSD. One good thing to witness that the government has not imposed any sales tax on petrol HSD prices.
A couple of days back, the finance division decided to retain the prices of petroleum products. The current price of petrol is Rs. 255.63 per litre whilst HSD stands at Rs. 258.64 per litre.
What do you think about the details revealing the tax and duty figures pushing prices of petroleum products to this significant scale? Tell us in the comments section.
