Petroleum levy target part of budget, can’t be altered without consulting multilateral partners: Minister

ISLAMABAD  –  Petroleum Minister Ali Pervaiz Malik on Wednesday categorically stated that the petroleum levy target is part of the budget and cannot be altered without consulting multilateral partners. The minister stated that while briefing National Assembly Standing Committee on Petroleum Division that met under the chairmanship of Syed Mustafa Mehmood.

The committee decided to include the matter of Universal Gas Distribution Company (UGDC) and commercial sale of gas under the new policy as a special agenda item for its next meeting. The committee directed that a representative of UGDC be invited to brief on its approval, procurement and sale mechanism, customer base, pricing, transportation arrangements, use of SNGPL/SSGC infrastructure and regulatory requirements.

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The committee also discussed provision of economical fuel to farmers through light diesel oil (LDO) and noted it for further examination regarding agricultural benefits and safeguards against misuse, diversion and revenue leakage. The secretary, Petroleum Division, was directed to conduct research and provide details at the next meeting. While briefing the committee, Federal Minister for Petroleum Ali Pervaiz Malik said diesel price would have reached Rs600 per litre if the government had not intervened, warning that regional tensions have severely disrupted crude oil, petrol and diesel supplies. Committee member Saif ul Malook Khokhar questioned why there is so much petroleum levy on petrol and diesel, saying it is a huge burden on the public and an easy way of tax collection for the government.

Minister Malik said the government knows the public is in distress. Naveed Qamar said petroleum levy is a non-tax revenue, there is no vote of parliamentarians on it and it is in the hands of the executive who can impose it whenever they want. Responding, Ali Pervaiz Malik said: “We have not hidden anything, everything is given on OGRA’s website.” He confirmed there is Rs80 levy on petrol and Rs80 on diesel. Member Mohammad Moeen Aamir Pirzada said people are distressed and petroleum prices should be reviewed.

Naveed Qamar questioned why the government does not exit petroleum product pricing and why it moved from a 30-day price formula to 15 days and finally to a daily basis. The committee stressed the need for transparency, predictability and public awareness regarding taxes, levies, transportation costs and international benchmarks.  It was clarified that petroleum levy is non-tax revenue, distinct from customs duty and other taxes, though it is a significant component of prices. The committee noted the levy, initially meant to absorb price fluctuations, had become a regular revenue source.

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On refineries, the minister informed that four out of five refineries have executed upgradation agreements, while negotiations with the remaining refinery are in progress. The government is coordinating with refineries to maximise domestic production and reduce import dependence. The committee expressed concern over production of higher-sulphur products and its environmental implications during the smog and winter season. The committee discussed petroleum smuggling and was informed by the Petroleum Division that end-to-end digitization of the petroleum supply chain would help identify discrepancies between quantities imported and sold.

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