Every month from 1st or 16th. government of Pakistan changes the prices of petroleum products in Pakistan. However for the month of November 2023, government of Pakistan have decided to keep the prices same as the last 15 days of october. The petroleum prices in Pakistan depend on the different factors. These factors include, but are not limited to, the value of local currency against foreign currencies like US dollar and also the crude oil prices in the international market.
Recently the Pakistani currency have gained some value against foreign currencies and also the crude oil prices are going down significantly in the international market. So there was some room in the prices of petroleum products so that they could have been decreased. Many people were actually expecting this decrease but the government of Pakistan have decided to keep the prices same. The current petrol and diesel prices for first fifteen days of November 2023 are as follows.
|High Speed Diesel (HSD)||303.18|
Mechanism to decide the petroleum prices in Pakistan
Oil and Gas Regulatory Authority (OGRA) actually decides the of petroleum products prices but the final decision on the prices is made by the finance ministry of govt of Pakistan. So what the OGRA does is that they calculate the new price based on local currency value, crude oil price in international market, taxes and other factors. After calculating the new prices they send the summary to government finance ministry. Then finally finance ministry decides if they have increase or decrease the price.
So the next decision about the petroleum prices increase or decrease will be made on the 15th of this month. After which, the new prices will be applicable from 16th to 30th November. Previously government used to change these prices every month but now they have increased the frequency. Now they change these prices every 15 days.
Tax collection on petroleum products in Pakistan
Pakistan heavily relies on the import of petroleum products for its energy needs, as our local resources do not account for even the quarter of the energy needs Pakistan have. Also government have made the petroleum products a great source of tax collection. As for every litre of fuel, according the rough estimates, about third of the price accounts for taxes which govt collects for consumers. Let it be the transporters, motorists or industries, everyone alike.
Transportation sector and lots of other Industries depend on the prices of fuel, so taking too much taxes on the fuel is not a good strategy. Because this increases the costs of good and services for people. It have an affect in the overall economy which causes the overall inflation to rise. So instead of taking too much taxes on the fuel, government should give more and more incentives to the industries. And should also try to incentivise them to export their products and services. On those exports government will then be able to collect the taxes and also it will be a great source of foreign exchange coming to the country.