Petrol, Diesel prices in Pakistan set to drop amid lower international rates

ISLAMABAD: For the second consecutive fortnight, major petroleum products, petrol and high-speed diesel (HSD) are expected to see a reduction in price by up to Rs9.20 per liter, driven primarily by lower international prices.

Read more: Govt announces massive decrease in petrol prices; Check latest rates here

Sources indicate that international petrol prices and HSD dropped by more than $3 per barrel over the last fortnight. Based on final exchange rate calculations and current tax rates, petrol prices are anticipated to drop by Rs8.50-9.30 per litre, while HSD prices are expected to fall by Rs8-9 per litre.

Currently, the average international price of petrol stands at $84 per barrel, and HSD has decreased to about $91 per barrel.

During this period, the import premiums for both petrol and HSD remained steady at approximately $9 and $5 per barrel, respectively. However, the local currency experienced a slight depreciation against the US dollar.

Presently, the ex-depot price of petrol is Rs269.43 per liter, and HSD is Rs272.77 per litre. In the previous fortnightly review on July 31, the government reduced petrol and HSD prices by about Rs6.17 and Rs10.86 per litre, following increases of Rs17.44 and Rs15.74 in July.

Between May 1 and June 15, petrol and HSD prices had previously decreased by around Rs35 and Rs22 per litre, respectively.

Additionally, kerosene and light diesel oil are also projected to become cheaper by Rs10 and Rs5 per litre in the upcoming fortnight.

Petrol, used primarily in private transport, small vehicles, rickshaws, and two-wheelers, directly impacts the budgets of the middle and lower middle classes.

Moreover, HSD, crucial for the transport sector, affects the prices of essential goods as it powers heavy transport vehicles, trains, and agricultural machinery. Despite the drop in petroleum prices, the effects are rarely reflected in transport fares and the prices of essential commodities.

The government has increased the maximum petroleum levy to Rs70 per litre in the finance bill to generate Rs1.28 trillion in the next fiscal year, up from Rs1.019 trillion collected in the previous fiscal year—about Rs150 billion more than the Rs869 billion budgeted target.

Currently, the government imposes approximately Rs78 per liter in taxes on petrol and HSD. Although the general sales tax (GST) is zero on all petroleum products, an Rs60 per litre petroleum development levy (PDL) is charged on both products, affecting consumers.

In addition, there is a custom duty of about Rs18 per litre on petrol and HSD, regardless of local production or imports. Distribution and sale margins totaling around Rs17 per litre go to oil companies and their dealers.