In its third consecutive fortnightly review, the federal government has announced a reduction in the price of petrol by Rs4.74 per litre, responding to a decline in global oil prices.
Effective immediately, the new price of petrol stands at Rs268.36 per litre, down from Rs273.10 per litre previously. Additionally, high-speed diesel prices have been cut by Rs3.86 per litre to Rs270.22 from Rs274.08.
Citing a notification from the finance ministry, the reduction in petroleum product prices reflects the downward trend observed in the international market over the last fortnight. The Oil & Gas Regulatory Authority (OGRA) has calculated the consumer prices based on global market fluctuations.
These revised rates, offering relief to the inflation-affected populace, will take effect from 12 am on June 1, as stated in a notification from the Finance Division released on Friday.
In the previous review, the government had approved significant cuts of Rs15.39 per litre in petrol prices and Rs7.88 per litre in diesel prices.
Pakistan revises petroleum product prices every 15 days, aligning them with global oil price trends and the exchange rate of the rupee against the dollar. The Pakistani rupee has remained stable recently.
With approximately 85% of Pakistan’s oil requirements imported, the country faces challenges related to its balance of payments and surging inflation, which reached 17.3% year-on-year in April.
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ue to a bearish trend in the international market, petrol and high-speed diesel (HSD) prices are anticipated to decrease by approximately Rs6.50 to Rs7.50 per litre on May 31, despite a slight exchange rate loss.
Informed sources revealed that the prices of petrol and HSD had witnessed a decline in the international market by about $3.25 and $2.10 per barrel, respectively, in the last fortnight. This follows the previous fortnight’s drop of $8.7 and $4.3 per barrel in petrol and HSD rates, respectively.
Based on the final calculation of the Inland Freight Equalisation Margin (IFEM), the petrol price is projected to come down by Rs7.25 and HSD by Rs6.25 per litre. The import premium on petrol has decreased by about 7% in the last fortnight to $9.70 from $10.30 per barrel.
However, the rupee slightly weakened by about 10 paise against the US dollar during the same period. The net impact is estimated to result in about Rs7 per litre reduction in petrol price from the existing ex-depot rate of Rs273.10.
Similarly, the HSD price also experienced a decrease by about $2.10 per barrel in the international market, with its import premium paid by the benchmark Pakistan State Oil (PSO) remaining unchanged at $6.50 per barrel. Consequently, the HSD rate was estimated to be down by Rs6.25 per litre, subject to final exchange rate adjustment and IFEM in pricing, from the current rate of Rs274.08 per litre at the depot stage.
Officials noted that the price of petrol had dropped to about $95 per barrel from around $98.27 per barrel earlier in the international market, while the price of HSD had reduced to $97 from $99.12 per barrel. Additionally, the prices of petrol and HSD had also decreased by Rs15.93 and Rs7.88 per litre, respectively, with effect from May 16.
The government has already achieved the Rs60 per litre petroleum levy—the maximum permissible limit under the law—on both petrol and HSD and collected Rs720 billion in the first nine months ending March 31. The government had set a budget target to collect Rs869 billion as petroleum development levy (PDL) on petroleum products during the current fiscal year under the commitments made with the International Monetary Fund (IMF).
Higher petroleum and electricity prices have been contributing to inflation. Petrol, primarily used in private transport, small vehicles, rickshaws, and two-wheelers, directly impacts the budgets of the middle and lower middle classes. On the other hand, HSD prices, highly inflationary, are predominantly used in heavy transport vehicles, trains, and agricultural engines, further affecting the prices of vegetables and other essential commodities.
Currently, the government levies about Rs82 per litre tax on petrol and HSD, with zero general sales tax (GST) on all petroleum products. Additionally, the government imposes Rs60 per litre PDL on both products, along with Rs50 per litre for high-octane blending components and 95RON petrol. Moreover, about Rs19-20 per litre customs duty is charged on petrol and HSD.
Petrol and HSD are major revenue generators, with monthly sales of about 700,000-800,000 tonnes, significantly higher than the demand for kerosene, which stands at just 10,000 tonnes.
