The effect of Taxes on petroleum prices

Petrol and diesel prices have been reduced for the current fortnight from April 1-15. The new petrol price is Rs110.35 per litre, down from Rs111.90 and the new diesel price is Rs113.08 per litre, down from Rs116.08. Landed cost or ex-refinery cost of petrol is Rs72.28 per litre.

A maximum of Rs30 per litre can be charged as petroleum development levy (PDL) under the rules but it has been kept at a low level of Rs11.23.

Similar is the price structure of diesel. Light diesel oil (LDO) and kerosene prices have been slashed by Rs1.56 and Rs1.55 per litre respectively. On LDO and kerosene, taxes are not usually charged to keep prices low.

In the prevailing circumstances, petroleum prices could not have been possibly lower than what have been announced.

In Pakistan, petrol prices have traditionally been the lowest in the region, while in the case of diesel prices have been varying. The latest international data, as of March 29, 2021, puts Pakistan in the lowest oil price category except for Sri Lanka. In Sri Lanka, the diesel price is at $0.523 per litre against Pakistan’s $0.755. Pakistan’s petrol price is, however, the lowest at $0.728 per litre against India’s $1.274, Bangladesh’s $1.05 and even Sri Lanka’s $0.809.