ISLAMABAD: With the PPP-led government estimating about 13 per cent increase in petroleum prices on Jan 31, all other parliamentary parties on Thursday opposed passing on the raise to consumers.
At a meeting of the parliamentary committee on oil pricing, led by Petroleum Minister Naveed Qamar, officials of the Ministry of Finance and Petroleum said the government had set a revenue target of Rs300 billion for the current year.
This included a combined target of Rs267 billion on account of petroleum levy and general sales tax, about Rs20 billion customs duty and remaining government taxes in the shape of 35 per cent corporate tax payable by private companies.
The committee was informed that the government had collected about Rs43 billion on account of GST and Rs32 billion in petroleum levy in the first six months of the current financial year. The government will have to raise petroleum prices by an average 13 per cent, resulting in a surge of Rs9.43 paisa per litre on petrol and Rs9.20 per litre on diesel to ensure tax collection target and zero subsidy, the committee was informed.
Sardar Mehtab Khan Abbasi of PML-N and Sohail Mansoor of MQM told reporters after the meeting that they would not allow any increase in the petroleum prices. But signals coming from inside the meeting suggest that the parliamentary committee may agree to a partial increase in oil prices to help the government contain fiscal deficit.
Informed sources said the PML-N, MQM, ANP and PML-Q were critical of freight charges that are charged to maintain uniform oil pricing across the country and said this was grossly being misused. The PML-N and MQM suggested deregulation of freight charges in line with Bhagwandas Commission’s recommendations.
It was suggested that if freight pool deregulation was taken in hand the petroleum prices would increase by about Rs5-6 in Karachi, Rawalpindi and Multan or other stations closer to refining facilities instead of proposed Rs9.40 per litre while rates would be higher by Rs11-12 in Khyber Pakhtunkhwa and Balochistan and Northern region.
This was strongly opposed by ANP’s Haji Adeel who said that if oil prices were to be higher in his province, then same principle should also be applied on electricity.
“The power generation cost in Khyber Pakhtunkhwa is around Rs1 per unit, why should the consumers in KP be charged at the same rate as those in Karachi and other areas where generation cost is much higher when oil prices are going to be higher in KP than Karachi”, Mr Adeel was quoted as telling the committee.
The committee which also includes Sardar Mehtab Khan Abbasi and Engineer Khuram Dastgir of PML-N, Haji Adeel of ANP, Khawaja Sohail Mansoor of MQM and Mohammad Sher Ahmad of PML-Q, was given a comprehensive briefing on each component of the oil pricing formula including ex-refinery price, commissions of marketing companies and dealers, freight charges, general sales tax and petroleum levy etc.
The finance ministry told the committee that if the oil prices were not increased, the government will have to resort to heavy borrowing from the State Bank of Pakistan or additional currency printing. This would depreciate the Pakistan currency against dollar, multiplying the overall debt position and ultimately affecting consumers through higher inflation.
The representatives of the MQM, PML-N and Q were of the view that they understood the government’s fiscal difficulties but it should manage such challenges through better fiscal discipline by containing smuggling and corruption in the tax collection machinery.
The committee decided to hold another meeting on January 31, the day when monthly price revision becomes due, in which minister for finance Dr Abdul Hafeez Shaikh, secretary finance Dr Waqar Masood Khan and chairman of Federal Board of Revenue Salman Siddiqui would give their input about the oil pricing.
