ISLAMABAD: In response to lower international oil prices, the government is anticipated to reduce petrol and high-speed diesel (HSD) rates in its upcoming fortnightly price review on June 15. Petrol prices are expected to decrease by about Rs9 per liter, while HSD rates might drop by Rs5 per liter.
Sources indicate that international prices for petrol and HSD have fallen by approximately $3.75 and $2.7 per barrel, respectively, over the past two weeks. This follows a previous reduction of around $12 and $8 per barrel for petrol and HSD, respectively, in the last two fortnights. Consequently, petrol prices have decreased to slightly over $90 per barrel from $94, and HSD prices have declined to $95 from $98 per barrel.
The import premium on petrol has also seen a minor decrease, now at $9.50 per barrel, down from $9.70. Meanwhile, the rupee has remained stable. Factoring in the inland freight equalisation margin (IFEM), the final price cuts for petrol and HSD are projected at Rs9 and Rs5 per liter, respectively.
These prices include the Petroleum Development Levy (PDL), with the government having reached the maximum permissible limit of Rs60 per liter for both petrol and HSD. The PDL has generated Rs720 billion in the first nine months of the fiscal year ending March 31, with a revised annual target of Rs960 billion.
Currently, the government levies approximately Rs80 per liter in taxes on both petrol and HSD, including Rs19-20 per liter in customs duty, despite a zero general sales tax on all petroleum products.
Petrol and HSD are significant revenue sources, with monthly sales ranging from 700,000 to 800,000 tonnes, compared to just 10,000 tonnes for kerosene. Petroleum and electricity prices remain key inflation drivers, with petrol primarily used in private transport and small vehicles, impacting the middle and lower-middle class. HSD’s role in heavy transport, agriculture, and its impact on the prices of essential goods further contribute to inflation.
Story by Khaleeq Kiani
