Price of Petrol, Diesel Likely to Go Up By Rs. 45 Per Liter After New IMF Demand

The price of MS Petrol, High-Speed Diesel (HSD), kerosene oil, and light diesel oil (LDO) will likely spike by Rs. 45 per liter after the International Monetary Fund (IMF) demanded Pakistan to impose an 18 percent sales tax on petroleum products. The lender has turned down Pakistan’s proposal to impose a 1-2 percent sales tax on petroleum products and wants a higher 18 percent to be charged, reported a national daily. The government has refrained from implementing the IMF’s demand, at least for now. However, the lender’s stance has jeopardized the $5-6 billion upgrade projects under the Brownfield Refinery Policy 2023. Local refineries have so far lamented that the proposed shift from zero-rated to exempt status for sales tax on petroleum products has already increased operational and project costs and canceled out a $1.65 billion incentive package under the ESCROW account. They expect to report a $1.152 billion loss from the exemption’s impact and warn of a $1 billion annual foreign exchange loss due to delayed upgrades. The IMF has also suggested imposing a 15 percent sales tax on essential items like food, however, the federal government hasn’t touched more on this subject so far. However, the government is considering reducing the petroleum levy by Rs. 45 per liter from Rs. 60 and imposing an equivalent 18 percent sales tax. The IMF has not objected to this adjustment provided it ensures the agreed revenue goals.