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Revenue from petroleum products increased by more than 50% - Naveed Yaseen - 07-06-2008 06:12 AM
(Naveed notes: 'Maray Ko Maaray Shah Madar')
* Revenue increased through GST, PDL n Refineries, OMCs & dealers earned handsome profits during the last four months
By Muhammad Yasir
KARACHI: The governments’ revenue, under General Sales Tax (GST), on four major petroleum products have increased by nearly 50 percent during the last four months, Daily Times learnt.
The recent increase of one percent GST made by the government coupled with the five times price hike on the petroleum products has increased the amount of taxes by almost 50 percent in the government kitty.
Major petroleum products consumed in the country include diesel, petrol, kerosene oil, High Octane Blended Component Fuel (HOBC) and Light diesel Oil (LDO).
Whenever the prescribed price of these products increases, it results in the increasing governments revenue under GST and PDL.
During the past four months, GST on each litre on petrol by 3.44 or 49 percent, it enhanced by Rs 3.80 or 45 percent on HOBC; Rs 2.26 or 49 percent on Kerosene Oil and Rs 2.52 or 59 percent on LDO as per the data available on Oil and Gas Regulatory Authority’s website.
It is imperative mentioning here that the Federal Board of Revenue (FBR), in its third quarterly report released recently, pointed out that around 46.8 percent growth is witnessed under GST collection on petroleum products. GST on petroleum products increased to Rs 33.222 billion during July to March of 2007-08 as compared to Rs 23.105 billion of the same period of 2006-07.
Besides, Petroleum Development Levy on petrol, HOBC, and diesel have also been adding massive sum in government’s revenues during the same period.
Similarly, the profit margins of dealers and Oil Marketing Companies (OMCs) that are fixed at 4 percent and 3.5 percent also witnessed massive growth during the previous four months.
OMCs commission on on petrol soared to Rs 2.12 per litre from Rs 1.52. On HOBC, profit margins improved to Rs 2.44 per litre from Rs 1.64, on Kerosene oil commission increased to Rs 1.45 per litre from Rs 1.04 per litre and profit’s on LDO surged to Rs 1.43 from Rs 0.96 per litre. That shows, cumulative increase of 45 percent, 39 percent, 48 percent, 39 percent and 49 percent, respectively on OMC’s profit from the above mentioned products during four months.
As far as petroleum dealers are concerned, their profit margins have risen significantly. The commission on petrol has risen to Rs 2.43 per litre from Rs 1.74. It surged to Rs 2.79 per litre from Rs 1.88 on HOBC.
The PPP-led government has hiked petroleum products and hinted to shift gradual burden of subsidies to consumers in a year. It also decreased subsidies on petrol by 20 percent to Rs 140 billion in the recent budget. However, the previous government allocated Rs 175 billion in 2006-07. Besides, price of crude oil has touched $145 per barrel in global markets hinting a possible hike in the domestic prices. Currently, the government is paying over Rs one billion subsidy per day only on diesel.
Petrol (MS) and diesel (HSD), which constitute around 8 percent and 43 percent of total oil consumption, have been providing windfall profits to government, OMCs, refineries and dealers.
The government and Oil Marketing Companies (OMCs) seemed to be at loggerhead nowadays to constitute a new price mechanism for POL. However, OMCs are reluctant to face any cut in their profit margins and crying over the unpaid Price Deferential Claims (PDC).
On the other hand petroleum dealers have also warned government on any change in the current formula that will reduce their margin.
Local refineries are also earning windfall gains on diesel’s deemed duty, which is 10 percent. They urged the government not to take any aggressive action to cut their profit margins through removal of deemed duties, claiming that it would plunge them into financial quagmire.
The talks between the government and other stakeholders of petroleum sector have continued for the last two months but remained inconclusive.
Refineries, OMCs and dealers’ rising profit have not been curtailed or controlled, instead the burden has been shifted on the common man.
In addition to all these profits, the consumers have to pay inland freight margin that is included in the sale price of petroleum products. These charges have been increased by 80 percent, overall on the four products. Margin was being charged at Rs 11.84 cumulatively on petrol, HOBC, Kerosene Oil and LDO in February. Now, it has increased to Rs 21.37 on these products, except diesel.
The basic price of petrol has increased by Rs 16.02 per litre to stand at Rs 60.77 in last four months besides profits, inland freight margins, OMCs and dealers margin. Its retail price stands at Rs 75.69 per litre.
According to OGRA’s data, the basic price of HOBC has increased by Rs 15.9 to Rs 67.99 per litre in the same period excluding taxes and the three margins. The prices of Kerosene Oil and LDO have increased by Rs 10.18 and Rs 13.23 to reach the retail level at Rs 38.10 and Rs 38.76 per litre. The government is also paying subsidy of more than Rs 25 per litre on kerosene oil.
http://www.dailytimes.com.pk/default.asp?page=2008\07\06\story_6-7-2008_pg5_13