The National Petroleum Authority (NPA) has decided to reverse the suspension of the Price Stabilization and Recovery Levy on petroleum products, as outlined in a letter dated April 3, 2024, addressed to various players in the oil marketing and distribution industry.
According to the directive, effective April 4, 2024, a levy of 16 pesewas per litre on petrol, 14 pesewas per litre on diesel, and 14 pesewas per kilogram on Liquefied Petroleum Gas (LPG) should be applied.
The reasons behind this reversal are not explicitly stated. The NPA had previously announced the suspension of the Price Stabilization and Recovery Levy on March 28, 2024, following a directive from the Finance Ministry in collaboration with the Energy Ministry. This suspension was intended to be in effect from April 1 to June 30, 2024.
The decision to reinstate the levy could lead to an increase in the prices of petroleum products from April 4, 2024. This is because the adjustments made by Oil Marketing Companies on April 1 did not include the Price Stabilization and Recovery Levy in their price build-up calculations.
The Energy Sector Levies Act 2015 (Act 899) empowers the National Petroleum Authority to stabilize petroleum product prices for consumers over a specific period. The current levy rates are 16 pesewas per litre for petrol, 14 pesewas per litre for diesel, and 14 pesewas per kilogram for LPG.
The government has previously used the suspension of this levy as a means to cushion consumers from the impact of rising international market prices. When prices reach a certain level, the government freezes the application of the levy to mitigate the impact on consumers. However, when prices drop to a certain level, the levies are reinstated.