Current petroleum levy should be maintained

KARACHI - As the international oil prices have declined by around $15 per barrel during last few weeks, the government is yet to set next oil price revision after 6 days. According to different analysts including Nadeem Ahmed, Farhan Mahmood and Hafeez-ur-Rehman, if government maintains the current PL rates on various oil products, local petroleum prices might come down by Rs 5/liter. In case the govt increases the PL, oil prices would remain at current level. They said that the Ministry of Petroleum has power to change the PL through official gazette under the powers conferred by section 3 of the Petroleum Products Ordinance 1961. The analysts said that if the government increases PL rate by Rs 5 per liter, the PL collection will increase by Rs 60 to 65b annually. As far as the change in PL tax rate is concerned there will be no impact on OMCs and refineries since their margins are exclusive of these rates, they added. While talking about the international oil prices the analysts said that now with international oil prices down to $69 per barrel, more than 3 month low, domestic oil prices are expected to decline by Rs 4 to 5 per liter from next month but the tax starved government is finding its way to increase the PL by Rs 4 to 5 per liter to offset the impact of decline in int'l oil prices so as to maintain local retail prices at current levels. Following the Supreme Court directives to abolish carbon tax, Ministry of Petroleum and Natural Resources (MPNR) issued an official gazette on July 8, 2009 to replace carbon tax which was previously PDL or Petroleum Development Levy with PL. The current PL rates have been defined under Finance Act 2009. And thus for the last 10 months, the government is charging fixed PL of Rs 10 per liter on petrol, Rs 8 per liter on diesel and Rs 3 to 6 per liter on LDO and kerosene, they said.