ECC allows revising premium benchmark for HSD Pricing

ECC on Friday allowed a premium on HSD subject to a maximum capping at US$ 15/BBL for importing OMCs for the months of November and December 2022.

ECC allowed increasing the petroleum levy from Rs 30 up to Rs. 50 per liter on RON 95 and above, with effect from November 16, 2022.

It also approved technical supplementary grants of Rs. 5 billion for the conduct of the 7th population census.

The economic coordination committee (ECC) was proposed to change the premium benchmark for HSD and gas oil to set the prices.

The economic decision-making body approved the premium for HSD to be included in the pricing mechanism.

According to sources, currently, Pakistan State Oil (PSO) pays a premium of 8.5 dollars per barrel which has been negotiated with Kuwait Petroleum Corporation (KPC) for the long-term supply contracts to be used in the pricing.

The actual premium in the market is generally higher between 12-15 dollars per barrel (bbl).

This means that other oil marketing companies (OMCs) will lose Rs 6-7 per liter if they import diesel will and therefore they don’t import which can create shortages, sources said.ECC approves Rs 6 per liter increase in OMCs’ Margins

The proposal being tabled before the economic coordination committee (ECC) is to use the premium of imported HSD by other oil marketing companies (OMCs) in the pricing.

Pakistan State Oil (PSO) and oil refineries will pay back the difference.

Increase in the sales tax rate on HOBC

The government is currently charging Petroleum Levy (PL) on HOBC at the rate of Rs 30 per liter whereas it charges Rs 50 per liter petroleum levy on petrol.

The government wants to increase the rate of sales tax on HOBC to bridge the gap between the rate of petroleum levy on petrol and HOBC to make more money, sources said.

They added that government could charge Rs 20 per liter general sales tax on GST to bring the total tax to the level of Rs 50 per liter being charged on petrol.

The government is currently charging zero sales tax on all petroleum products.