ISLAMABAD - The provinces have demanded the federal government to fulfill their obligation, under 18th amendment, and impose Rs 7 per liter excise duty on crude oil, it is learnt reliably here on Thursday.
The official sources told The Nation that the provinces of Balochistan, Khyber Pukhtunkhwa (KP) and Sindh have demanded the government to impose Rs 7 per liter Excise Duty on crude oil wellhead prices, so they can get their billion of rupees share.
It is a pre-requisite under 18th amendment that the government will impose excise duty on the local produced crude oil but for the last five years the government using different pretext to avoid its imposition, the source maintained.
According the source under the 18th amendment the federal government will collect the excise duty and will distribute it among the provinces as per their share of crude oil production. In every meeting the provinces are being told that the federal government will impose the duty but so far it proved just shallow promises. One time the federal government will say that the matter pertains to OGRA, while the other time they tell that it is the domain of Federal Board of Revenue (FBR) and it is not in their authority to impose the duty, the source informed adding that the matter is very simple but the federal government lack of sincerity is making it hard. As per rule, the Ministry of Petroleum, which is policy making body, will ask OGRA, a regulatory body, to impose excise duty which is a constitutional provision, the source maintained.
When asked that the imposition of the excise duty will further increase the prices of petroleum products, the official said that with Rs 7 excise duty on the wellhead means only Rs 1.4 per liter increase in the petrol pump prices. But if the federal government decreased the petroleum levy, which is currently about Rs 17 per liter, there will be no increase in the consumer prices, the official explained adding that the provinces have already asked the government to reduce its petroleum levy on the product to keep the prices low.
The federal government has to make some sort of adjustment to implement this constitutional obligation as they cannot linger on the issue for long time, the source informed.
Talking about the share of the provinces in the proposed Excise Duty, the official said that each province has different share as per its contribution to the national oil production. For example the official said that KP is producing 50,000 barrels crude oil per day, Sindh 30,000 barrels, Balochistan and Punjab 10,000 barrels each respectively.
With seven percent Excise Duty KP share is about Rs 14 to 15 billion per year, Sindh about Rs 8 to 9 billion, while Balochistan and Punjab will have the share of about Rs 3 billion each, the source maintained.