Introduction
The Petroleum Products (Development Surcharge) Rules, 1967, govern the imposition and collection of development surcharges on petroleum products in Pakistan. These rules, established under the Petroleum Products (Development Surcharge) Ordinance, 1961, were promulgated to regulate the financial contributions of oil companies towards the development of the petroleum sector. This comprehensive article by Josh and Mak International provides an in-depth overview of these rules, highlighting their significance and application.
Key Provisions of the Rules
- Short Title and Commencement
- These rules are officially known as the Petroleum Products (Development Surcharge) Rules, 1967.
- They came into effect on 1st April 1967.
- Definitions
- “Director” refers to the Director Oil Operations or any authorised officer.
- “Gallon” means “Imperial Gallon”.
- “Ordinance” refers to the Petroleum Products (Development Surcharge) Ordinance, 1961.
- “Schedule” means a Schedule appended to these rules.
- “Ton” means “Long Ton of 2240 lbs”.
- Prescribed Price for Oil Distribution Companies
- The Director determines the prescribed price for petroleum products for oil companies (other than refineries), considering factors such as cost and freight, marine insurance, ocean losses, statutory charges, distribution margin, inland transportation expenses, and dealers’ commission.
- Variation in the Elements of Prescribed Price
- Any variation in the elements of the prescribed price is reflected from the first of the month following the date of variation, except for statutory charges which have immediate effect.
- Excess of Depreciation and Interest
- The Central Government may allow an increase in the distribution margin to cover higher depreciation value and interest charges if the fixed assets of a company were acquired at comparatively higher costs.
- Inland Transportation Expenses
- Expenses incurred on inland transport by any company are adjusted against the fixed sale price declared by the Director. Detailed provisions regulate what can be included and excluded in computing inland transportation expenses.
- Prescribed Price for Refineries
- The prescribed price of petroleum products refined by refineries in Pakistan is determined by the Director, considering the common elements included in the prescribed price of imported petroleum products and the special circumstances of each refinery.
- Payment of Development Surcharge
- The development surcharge is paid and deposited or refunded in the same manner as any duty of excise or customs duty.
Schedule of Petroleum Products
The rules include a detailed schedule listing various petroleum products and their respective nomenclature used in Pakistan and internationally. This schedule ensures standardized reporting and transparency in the classification and pricing of petroleum products.
Amendments to the Rules
Several amendments have been made to the Petroleum Products (Development Surcharge) Rules, 1967, to reflect changes in the regulatory and economic environment. Notably:
- Amendment on 29th June 2001
- The term “Development Surcharge” was replaced with “Petroleum Development Levy” throughout the rules.
- Rule 3, clause (h), which provided for the inland transportation expenses, was omitted.
Impact and Implementation
The Petroleum Products (Development Surcharge) Rules, 1967, play a critical role in regulating the financial contributions of oil companies towards the development of Pakistan’s petroleum sector. These rules ensure that the prescribed prices of petroleum products are reflective of various cost elements, thereby promoting transparency and accountability in the industry.
By mandating the payment of development surcharges and regulating the determination of prescribed prices, these rules contribute to the financial stability and growth of the petroleum sector. The detailed provisions on inland transportation expenses, depreciation, and interest ensure that oil companies are fairly compensated for their operational costs while contributing to national development.
Conclusion
The Petroleum Products (Development Surcharge) Rules, 1967, are a cornerstone of Pakistan’s petroleum regulatory framework. They provide a structured approach to determining the prescribed prices of petroleum products and ensuring that oil companies contribute fairly to the sector’s development. Through these rules, the government ensures transparency, accountability, and financial stability in the petroleum industry, fostering a conducive environment for growth and investment.
