ISLAMABAD: Due to the substantial drop in global oil prices and the strengthening of the rupee, it is expected that next month, the cost of petrol and high-speed diesel may dip below Rs 300 per liter.
In the upcoming price review, there is a likelihood of a reduction of Rs 20 per liter for high-speed diesel and Rs 38 per liter for petrol.
However, it’s worth noting that the interim government might make a different decision, particularly regarding high-speed diesel, which currently carries a petroleum development levy of Rs 50 per liter, compared to Rs 60 for petrol.
The interim government has set a target to generate a levy of approximately Rs 869 billion from petroleum products in the current fiscal year, in line with its commitments to the IMF.
If this scenario unfolds, it will be the second consecutive occasion when the interim government has taken steps to lower petroleum product prices.
Previously, between August 15 and September 15, petrol and high-speed diesel prices saw an increase of Rs 58.43 and Rs 55.83 per liter, respectively. During that period, the government imposed a tax of Rs 82 per liter on petrol and Rs 73 per liter on high-speed diesel.
At present, the General Sales Tax stands at zero for all petroleum products. However, there is a Petroleum Development Levy of Rs 60 per liter on petrol and Rs 50 per liter on high-speed diesel, High Octane Blending Component, and 95 Research Octane Number (RON) petrol.
Since September 1, petrol and diesel prices have exceeded Rs 300 per liter. Rising fuel costs, coupled with higher electricity prices, have been the primary drivers of consumer price increases, which pushed inflation to 31.4 percent in September.
Reports indicate that, based on current tax rates and other factors, the price of petrol may see a reduction of Rs 36 to Rs 38 per liter, given that international prices have dropped by 12 percent from $99 per barrel to $87 per barrel and the rupee has appreciated by 4 percent.
Over the past two weeks, the premium paid by Pakistan State Oil for securing imported cargo has increased from $15 to $16.7 per barrel. Taking these changes into account, it’s anticipated that the ex-refinery petrol price will decrease by more than Rs.38 per liter, making the ex-depot price approximately Rs.286 per liter for the next 15 days.
Conversely, the price of high-speed diesel is likely to increase by Rs 19 to Rs 20 per liter if the government decides to maintain the petroleum levy at Rs 50 per liter. However, the finance ministry may push for a levy increase of Rs 5 per liter to meet budgetary targets. In such a case, the petrol price may decrease by 14 to 15 rupees per liter.
In line with the global market, the price of high-speed diesel has also decreased by about $8 per barrel, falling from $122 to $114 per barrel in the last two weeks.