Pakistan: Rs30 bn taxes to be imposed to save Oil Cos

The Pakistan government has decided to impose additional taxes to the tune of Rs30 billion as it struggles to arrange Rs100bn emergency funding to avoid international default on oil and gas payments and keep the  staff level agreement with the International Monetary Fund (IMF) intact. The decision was taken at a special meeting of the Economic Coordination Committee (ECC) of the cabinet presided over by Finance Minister Miftah Ismail on Sunday.

The meeting was informed that the budgetary commitment with the IMF for Rs153bn primary budget surplus could not be met without additional taxation. The ECC also decided to examine reducing the price adjustments on a weekly or 10-day basis from existing fortnightly pricing to minimise price uncertainties. As per Dawn report, it also approved a supplementary budget grant of Rs30bn for immediate payment to state-run Pakistan State Oil (PSO) facing international payment obligations of about Rs270bn till August 28. The petroleum secretary pleaded that PSO had been raising SOS calls to avoid international default as delay in payments by respective entities had exhausted its liquidity. As a result, the company has not been able to deposit Rs81bn to the government’s local currency (NIDA) account for onward transmission to Kuwait Petroleum Cooperation (KPC) which is contractual obligation.

Meanwhile,Finance Minister Miftah Ismail announced a reduction in the price of petrol by Rs 3.05 per litre and a hike of Rs8.95 in the price of diesel with immediate effect. The price of Kerosene was similarly increased by Rs4.62 per litre while that of light diesel oil (LDO) was reduced by Rs0.12 per litre. The new prices are as follows: Rs227.19 for petrol, Rs244.95 for diesel, Rs201.07 for Kerosene and Rs191.32 for LDO. Under the deal with the IMF, the government has to gradually increase PDL on oil products to a maximum of Rs50 per litre to collect Rs855bn during the current fiscal year.