Why Govt Didn’t Reduce Petrol Price in Pakistan?
A couple of days back, there was widespread anticipation that petrol price in Pakistan would see a significant reduction. Analysts predicted a drop of up to Rs. 15 and Rs. 8 per litre for petrol and diesel, respectively, for the next fortnight, offering a glimmer of hope to citizens grappling with soaring inflation.
However, the federal government surprised the public by maintaining the current fuel prices, leaving many to wonder about the rationale behind this decision.
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Petroleum Levy Increased
The decision to keep petrol price teady comes despite a noticeable decline in international oil prices and a reduction in import premiums. So, why did the government choose not to pass on these savings to consumers? The answer lies in its fiscal strategy.
The government is focused on meeting its ambitious petroleum levy collection target of Rs. 1.281 trillion for the current fiscal year. By retaining the existing fuel prices, it aims to generate additional revenue to address other pressing economic challenges.
To achieve its revenue goals, the government has significantly increased the petroleum levy on various fuel products. Effective from March 16, the levy on petrol and high-speed diesel (HSD) was raised by 16.67%, from Rs. 60 to Rs. 70 per litre. Similarly, the levy on kerosene oil saw a dramatic hike of Rs. 10.91 per litre, jumping from a mere Rs. 0.05 to Rs. 10.96 per litre. Light diesel oil also experienced an increase, with the levy rising to Rs. 7.75 per litre.
Meeting Fiscal Targets
This adjustment in levies has allowed the government to maximize its revenue collection. Without these changes, the government would have fallen short of its Rs. 1.281 trillion target, collecting only Rs. 1.1 trillion based on previous levy rates.
However, this move has sparked mixed reactions. Some argue that it places an additional burden on consumers already struggling with high living costs. Others view it as a necessary step to stabilize the economy and address structural inefficiencies in the energy sector.
What are your thoughts on the government’s decision to maintain petrol prices and increase the petroleum levy? Share your views in the comments below.