Some of the oil marketing companies (OMCs) in Pakistan have been selling research octane number (RON)-95 as high-octane blended component (HOBC) RON-97 fuel to trick customers and earn more profits.
The government controls and announces the price of RON-92, which is a standardized import fuel. An official stated that it was linked to the petroleum levy and sales tax that were slashed to nearly zero after the government announced that fuel prices would stay the same until the new budget.
The pricing of RON-95 and RON-97 have been deregulated and it is up to OMCs to set their own rates. RON-97 is liable to Rs. 30 fuel levy and a 17.5% GST, while RON-95 is levied similar to RON-92.
A prominent OMC that imported RON-97 reported that a rival was importing RON-95 and reselling it as RON-97 to evade taxes. After failing to draw the attention of the government, the accusing OMC also began importing RON-95 and retailing it as RON-97.
RON-97 or higher is labeled ‘HOBC’ in most countries but RON-95 was sold as HOBC in Pakistan under different brand names.
As RON-97 is deregulated for HOBC, this implies that OMCs may sell the fuel at their desired rates. The government has set the petroleum development levy at Rs. 30 per liter and the full sales tax rate at 17 percent on the grounds that the owners of luxury SUVs or sports cars, who can acquire vehicles costing millions of rupees, must pay more for premium fuel.
This has created an irregularity in the case of HOBC RON-95 which was sold as RON-97 by certain OMCs. As this is a deregulated product, OMCs charge a huge premium for it and spend a lot of money on marketing campaigns to entice clients.
According to the official, a well-known OMC followed the RON-95 trend and delivered a substandard commodity to purchasers while also causing a deficit for the government.
Pakistan sells around 200 million liters of HOBC (RON-95 and RON-97) every year and a petroleum development levy of Rs. 6 billion is to be collected at a rate of Rs. 30 per liter.
Via The News