Islamabad, Pakistan – The federal government has taken the decision to increase the Petroleum Development Levy (PDL) by five rupees per litre on petroleum products, in a bid to meet one of the conditions set by the International Monetary Fund (IMF) for the bailout package. The hike brings the PDL to Rs. 55 per litre, as confirmed by sources at the Ministry of Finance.
Sources within the ministry have clarified that the hike will not be implemented on High-Speed Diesel (HSD), with the levy remaining at 50 rupees per litre for this particular fuel.
Government’s Efforts to Secure IMF Bailout
In a last-ditch effort to secure the stalled IMF bailout, the government has made several amendments to the budget for the fiscal year 2023-24, including changes to the petroleum ordinance. These modifications aim to meet the conditions set by the IMF, allowing Pakistan to move forward with the much-needed financial assistance.
Alongside the PDL hike, the government has also raised the freight margin on petrol by 2.51 rupees per litre, according to sources. The new freight margin on petrol stands at Rs. 6.20 per litre. It is important to note that oil companies have a margin of six rupees per litre, while petrol dealers enjoy a margin of seven rupees per litre, as per sources.
Sources have provided information on the basic prices and freight margins of petrol and diesel. The basic price of petrol is set at Rs. 187.80 per litre, while the freight margin on diesel has been adjusted to Rs. 2.31 per litre. Oil companies’ freight margin on diesel has seen an increase of 27 paise per litre.
On the other hand, sources indicate that the freight margin on diesel was previously at a deficit of 4.66 rupees per litre. With the latest adjustment, oil companies’ margin on diesel has risen to Rs. 6.27 per litre. The basic price of diesel currently stands at Rs. 201.89 per litre.
It is worth mentioning that the National Assembly passed the Finance Bill 2023-2024 last Sunday, providing the green light for the budgetary proposals for the upcoming financial year. However, the steep increases in energy prices have sparked concerns among consumers and industry stakeholders alike, who fear the adverse consequences on businesses and the overall cost of living.
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While the government’s decision to raise the PDL and freight margins is aimed at fulfilling IMF requirements, it does pose challenges for the public. The increase in fuel prices is likely to have a cascading effect on transportation costs, essential commodities, and general inflation. As a result, the government faces the task of balancing its commitment to the IMF with the need to alleviate the burden on the common man.
With the hike in the PDL and freight margins, the government hopes to meet the IMF conditions and secure the much-needed bailout package. However, it remains crucial for policymakers to carefully assess the impact on the economy and implement measures to mitigate any potential adverse effects. Striking a balance between meeting international obligations and safeguarding the interests of the citizens will be a key challenge for the government in the coming months.
