Islamabad:
The Prime Minister, Shehbaz Sharif, increased on Saturday the oil tax in RS10 per liter, an increase of 17%, to RS70 per liter, maintaining the prices of gasoline and diesel without changes, while using the additional fiscal space available to reduce the prices of electricity in approximately RS1.50 per unit.
In spite of the increase, the price of ex-depot gasoline will remain at RS255.63 per liter, while high-speed diesel will remain at RS258.64 per liter, according to officials of the Ministries of Finance and Energy.
The Government chose not to transmit the reduction of global oil prices to consumers, which should occur on March 16. It is expected that the total sanduction in electricity prices will be more than RS1.50 per unit, and the prime minister plans to announce the relief on March 23.
In the summary of the Ministry of Finance, the Prime Minister approved to increase the oil collection rates in RS10 per liter to RS70. The additional RS10 per liter will be used to reduce electricity prices by approximately RS1.50 per unit.
“We have decided to keep oil prices at their current levels and transfer the full financial benefit to the public by reducing electricity prices,” said Prime Minister.
The prime minister added that this measure is one of the many aimed at achieving a significant reduction in electric tariffs. “This step is among several others that will lead to a significant reduction in electricity prices.”
Residential consumers are forced to pay more than RS65 per unit of electricity price, which is the direct result of RS18 per unit of inactive capacity payments, a considerable cross subsidy of users of more than 300 monthly consumption is charged and builds the cost of inefficiency and theft in power rates.
The prime minister has commissioned his minister of power, Sardar Awais Leghari, to present a tangible proposal to reduce prices in the range of RS6 to RS7 per unit.
Compensation between gasoline and electricity prices is being done to address a problem of high electricity bills, which is harming all homes and industry, said Federal Petroleum Minister Ali Pervaiz Malik while talking with the Express PAkGazette.
Ali pointed out that although gasoline in Pakistan was one of the cheapest in the region, electricity was the most expensive, that the prime minister is trying to rebalance.
The Express PAkGazette reported on Saturday that the International Monetary Fund (IMF) had allowed Pakistan to increase oil to RS70 per liter and use funds to reduce energy prices. The tax has increased to absorb price reduction.
The prime minister said that a comprehensive and effective strategy is being prepared under which an electricity package is being developed to reduce electricity prices and that the details are being completed.
The government has estimated to win around 180 billion per year of the additional tax, which will use to reduce electricity prices by approximately RS1.50 per unit.
Government officials said that the total reduction in electricity prices will be greater than this after taking advantage of the fiscal space due to negative claims to adjust the fuel price of the previous months.
The government also tried to convince the IMF to reduce the GST rate in electricity invoices to reduce prices, but the fund did not agree.
According to a comparison from the government, to the parity of the US dollar, the price of gasoline in Pakistan is 91 cents compared to $ 1.15 in India, $ 1.26 in Sri Lanka and $ 1.04 in Bangladesh. However, a key reason behind the highest price in terms of dollars in neighboring countries is that their currencies are stronger in relation to a weaker rupe.
Similarly, the diesel price in Pakistan in terms of dollars is 92 cents, while it is $ 1.03 in India, $ 1.12 in Sri Lanka and 86 cents in Bangladesh.
Pakistan’s per capita income is also less than its regional peers, which limits the capacity of its citizens to pay high prices for fuel and electricity.
Gasoline is mainly used in private transport, small vehicles, Rickshaws and two -wheeled vehicles, and directly affects the budget of the middle and lower classes. Most transport and agriculture sectors work with high speed diesel.
After the new increase, total taxes in gasoline have increased to approximately RS86 per liter. The Government will now charge RS70 per liter of oil tax in addition to 10% of special taxes in the import stage.
The financial space created by changes in world oil prices and other measures will be used to provide significant relief to the public through the reduction of electricity costs, said Prime Minister.
He reiterated his government’s commitment to prioritize public relief since he assumed office.
According to the government’s decision, oil prices will remain the same until the end of the current month.
The price per liter of gasoline will remain at RS255.63, High Speed Diesel RS258.64, Querosen Oil RS168.13 and light diesel oil at RS153.34.
On the other hand, the work presented to the oil division by the industry a few days ago showed relief in the price of oil products up to RS14.16 per liter in line with a reduction in global oil prices.
The industry’s work showed that the ex-depot prices of gasoline could fall into RS14.16 per liter and it was projected that the same for Diesel fell into RS8.70 per liter.
A cutting cut of RS10.33 per liter was calculated in the price of chest oil, while light diesel oil could have to be droken with RS. 7.12 per liter.
