The government has recommenced efforts to deregulate the prices of kerosene and light diesel oil, essential fuels for the poor and the agriculture sector, after temporarily shelving the plan in 2022.
The petroleum division has put forth a proposal to maintain the petroleum levy, a tax imposed on oil products, at Rs50 per liter for both fuels following their deregulation, as per an official document. This proposal, part of a summary prepared by the petroleum division, awaits feedback from the finance division, the Federal Board of Revenue (FBR), the Oil and Gas Regulatory Authority (OGRA), and other stakeholders, considering its financial implications.
The potential deregulation, advocated by the oil industry for improved competition and efficiency, may impact inflation and the fiscal deficit, as the petroleum levy is a significant revenue source for the government, targeting Rs869 billion from it in the current fiscal year. If approved, the government would regulate only the prices of high-speed diesel and petrol, the two most widely used fuels.
