Karachi, November 15, 2022 (PPI-OT): Pakistan Refinery: Diesel remains upbeat; Sales tax/PDL imposition too harsh

With prices of diesel and petrol falling sharply to CYTD lows, down 25% and 38% respectively from peaks in June’22, there is expected to be some bullish pullback in the coming months.

Overall, distillate prices are expected to continue rising in November before slightly falling beginning in January, which is when activities from European refiners increases and U.S. refiners finish their seasonal maintenance.

With the IMF consistently conveying concerns over possible shortfall on account of Petroleum Development Levy (PDL), the government is looking towards a contingency plan by taking up additional taxation measures, for one, imposing full 17% GST on POL products.

To note, annual PDL collection target stands at PkR750bn (PkR62.5bn per month). Assuming unchanged trends in POL offtakes and similar rates, total PDL collections will end the current fiscal year at ~PkR350bn, an overall annual shortfall of PkR400bn.