By Muskan Naveed ISLAMABAD, Feb. 18 (INP-WealthPK): The current account deficit has widened to a staggering $9.1 billion with energy imports and COVID-19 vaccinations contributing a major chunk in the increase. The non-energy current account is expected to be in surplus for the remaining period of fiscal year 2021-22. This indicates the enormous pressure that the energy imports put on the current account – causing increase in the external imbalances. The break-down of petrol prices A major component of the petrol price in the country is the ex-refinery price which is the price at which refineries sell their products to oil marketing companies (OMCs) like Shell and Pakistan State Oil (PSO). This component cannot be set independently but, rather, is set by the oil and gas redistribution agency. It makes up 62.5% of the price of petrol. The inland freight equalization margin (IFEM) accounts for 3.6% of the price and is responsible for uniformity of the price of petrol throughout the country. The distributor’s margin earned by OMCs stands at 2.8%, while petrol station owners earn 3.7% per liter. The other two major components are the petroleum levy and the general sales tax (GST). Due to the global pandemic, commodity prices have been rising heavily in the international market which has led to the current supply-side inflation in Pakistan. Rise in oil prices Under the International Monetary Fund (IMF) conditions, the incumbent government has been advised to raise revenue as the fiscal deficit continues growing. For this purpose, the government has decided to raise the petroleum levy. Advisor to Prime Minister on Finance and Revenue Shaukat Tarin announced back in November that the petroleum levy is to be raised by Rs4 every month as the total petroleum levy has to reach Rs30 as per IMF’s demands along with a rise in GST on petroleum products. Before January 15, the government charged Rs17.13 petroleum levy, Rs7.31 or 5.45% GST and Rs10 customs duty on a liter of petrol, while high-speed diesel (HSD) had Rs17.62 levy, Rs3.53 (or2.5%) GST, and Rs9.26 customs duty. The prices of petroleum products increased by 6.2% internationally in the week before the January 15. The fortnightly revision of petrol prices came on January 15 as international prices have been rising steeply. The Ministry of Finance was expected to incur a loss of Rs2.6 billion in revenue amidst the falling sales tax on petroleum products which is why the government raised the prices by around Rs3. The price of petrol is Rs147.83, High-Speed Diesel Rs144.62 followed by Kerosene Rs116.48 and light diesel oil (LDO) Rs114.54. Local production required Pakistan is a net importer of petroleum products in order to meet its domestic energy requirements. The country has five oil refineries with combined production capacity of 3.3 million tons of petrol and 5.9 million tons of HSD. However, the current capacity is underutilized as the five refineries produce only 2.05 million tons of petrol and 3.96 million tons of HSD. On the other hand, due to resumption of economic activities as the dire impacts of the coronavirus pandemic waned off, the domestic demand has been rising. It is crucial for the country to focus on utilising the full production capacity of the existing oil refineries in order to minimize the impacts of the rising international oil prices.