In some welcome news for motorists in Pakistan, there’s a strong possibility that petrol prices are on the verge of dropping below the Rs. 300 per liter mark. This potential reduction in petrol prices is primarily attributed to a noticeable decline in global oil prices and the strengthening of the Pakistani rupee against the US dollar.
With estimates suggesting a potential decrease of up to Rs. 38 per liter for petrol. If this materializes, it would signify the most significant single drop in fuel prices.
Nonetheless, it’s important to keep in mind that the final decision regarding these price adjustments lies with the government, particularly concerning high-speed diesel (HSD). Currently, HSD carries a petroleum development levy of Rs. 50 per liter, while petrol bears a levy of Rs. 60 per liter. These levies are essential for the government to meet budgetary targets and fulfill commitments made to the International Monetary Fund (IMF) for the current fiscal year.
Expected reduction would mark the second consecutive decrease in petroleum prices implemented by the government. This comes on the heels of three successive fortnightly increases. It pushed the prices of petrol and HSD to record highs in the range of Rs. 331-333 per liter between August 15 and September 15.
At present, the government imposes approximately Rs. 82 per liter in taxes on petrol and Rs. 73 on HSD. While there’s currently a zero general sales tax on all petroleum products, there exists a petroleum development levy of Rs. 60 per liter on petrol and Rs. 50 per liter on HSD, among other fuels.
Over the past month, petrol and diesel prices have consistently remained above the Rs. 300 per liter threshold. These elevated prices, along with the rising costs of electricity, have been contributing significantly to mounting consumer expenses, resulting in inflation reaching 31.4 percent in September.
Likewise, the global price of high-speed diesel has seen an approximately $8 per barrel decrease in the past two weeks. Together with the rupee’s appreciation and stable import cargo premiums, the cost and freight price for HSD is likely to decrease by Rs. 22 per liter.
Both petrol and high-speed diesel prices serve as substantial revenue sources for the government, with significant monthly sales. They have a direct impact on various sectors of the economy and household budgets, making these anticipated price reductions particularly significant for middle- and lower-middle-class households. This potential price relief is poised to ease the financial burden on consumers and support economic stability.