The federal government late on Thursday raised the petroleum levy on petroleum products while keeping consumer prices unchanged for the next two weeks, effectively denying anticipated relief to the public in light of a global decline in fuel prices.
In a notification, the government said it was raising the petroleum levy on petrol by Rs. 4.62/liter and on high-speed diesel by Rs. 0.80/liter. Additionally, the levy on High Octane Blending Component (HOBC) was raised by Rs. 4.62/liter. In total, consumers are now paying Rs. 84.27/liter in petroleum levy for petrol and HOBC and Rs. 76.21/liter for high-speed diesel.
There is a petroleum levy on kerosene oil and light diesel oil of Rs. 20.36/liter and Rs. 15.84/liter, respectively.
Apart from the petroleum levy, the government is charging Rs. 2.5/liter in the form of a Climate Support Levy on all petroleum productions. The government also imposes Inland Freight Equalization Margin of Rs. 8.97/liter on petrol and Rs. 7.25/liter on high-speed diesel.
A separate notification issued by the Petroleum Division, meanwhile, said consumer prices of petrol and high-speed diesel would remain unchanged at Rs. 253.17/liter and Rs. 257.08/liter, respectively for the next two weeks. In effect, consumers are paying nearly Rs. 100 in the form of taxes on every liter of fuel they purchase.
According to market observers, the decision—in stark opposition to Prime Minister Shehbaz Sharif’s tall claims of passing on relief in fuel pricing to consumers—would help the government sustain its tax revenues amidst ongoing failure of the Federal Board of Revenue (FBR) to expand the tax base. However, it would deny any chance for reduction of fuel prices in line with international rates.
Petrol is primarily used by commuters, with higher fuel prices impacting the budgets of middle and lower-middle class households. High-speed diesel, meanwhile, is utilized in the transport sector and has significant inflationary impact on essential commodities.