ISLAMABAD: The price of petrol is expected to fall by Rs5.45 per litre and of diesel by Rs7.76 for February, according to the calculations of oil marketing companies, but the government has imposed up to 51 per cent sales tax and is likely to bag around Rs20 billion from these two products only.

According to oil marketing companies, the ex-refinery prices of diesel for February is likely to be Rs31.62 per litre, a decline from Rs39.38 for January.

The break-up of the oil prices, which is also available with Dawn, was forwarded on Saturday to the petroleum ministry and the Oil and Gas Regulatory Authority (Ogra).

Rs20bn taxes to be collected from petrol, diesel in February

The break-up shows that the petroleum levy for February will be Rs7.99; inland freight equalisation margin (IFEM) — the amount set to maintain oil prices equal across the country — is Rs1.18; the oil companies will get Rs2.35 at each litre of diesel sold and the margin for the dealers will be Rs2.6.

While the total cost of diesel in the country comes to Rs45.74 per litre, the government is set to impose 51pc sales tax, or Rs23.33, for February. The sales tax on the fuel for January is Rs27.29.

“The prices are estimated by the middle of each month, based on the traditional consumption pattern, local production and the import prices,” said an official of the petroleum ministry. “For January, three diesel cargoes of 50,000 tonnes each have already arrived at Karachi and one is expected later next week.”

Similarly, the estimated ex-refinery price for petrol is Rs38.89 per litre for February.

According to the settlement with the local refineries, the rate of locally produced products is the same as import price.

The other components of per-litre petrol price are: Rs9.77 as petroleum levy, IFEM at Rs3.48, oil companies’ margin at Rs2.60, and dealers’ margin at Rs3.08.

The total cost of one litre petrol in Pakistan comes to Rs57.82 for February 2016, but the government is likely to impose Rs12.09 sales tax to make the total at around Rs70 per litre. The monthly consumption of petrol in the country is around 350,000 tonnes.

However, the trend of recovering revenue shortfall from diesel and petrol is likely to invite decry from the Opposition in parliament. The Senate’s Standing Committee on Finance is also expected to take up the matter in the coming days.

“We are planning to take up this issue in the upcoming meeting as it relates directly with the ordinary citizens,” said Salim Mandviwalla, the chairman of the committee.

He added that the government initially said the whole decrease in petroleum prices were not being passed on to the consumers as they were trying to recover the subsidies paid in the head in the past.

“But now the government seems to have gone too far. It should not cover all its weaknesses in revenue collections from oil,” he said. “It is time to pass on the benefit of declining crude prices to consumers. It will help the economy, too.”

Published in Dawn, January 17th, 2016