Petrol price in pakistan to get cheaper by up to Rs7.5 per litre

ISLAMABAD: Due to a bearish trend in the international market, petrol and high-speed diesel (HSD) prices are predicted to down by approximately Rs6.50 to Rs7.50 per litre on May 31, despite a slight exchange rate loss.

According to reliable sources, the prices of petrol and HSD in the international market have dropped by about $3.25 and $2.10 per barrel, respectively, over the last two weeks. This decrease follows previous drops of $8.7 per barrel for petrol and $4.3 per barrel for HSD in the two weeks before that.

Based on the final calculation of the Inland Freight Equalisation Margin (IFEM), petrol prices are expected to drop by Rs7.25 per litre and high-speed diesel (HSD) by Rs6.25 per litre. Additionally, the import premium on petrol has decreased by around 7% in the past two weeks, going down from $10.30 to $9.70 per barrel.

However, the rupee slightly lost about 10 paise against the US dollar during the fortnight. The net impact is estimated to be about Rs7 per litre reduction in petrol price from the existing ex-depot rate of Rs273.10.

The international price of high-speed diesel (HSD) fell by about $2.10 per barrel. However, the import premium that Pakistan State Oil (PSO) pays stayed the same at $6.50 per barrel. This means the estimated HSD price is expected to drop by Rs6.25 per litre, depending on the final exchange rate and other pricing factors, from the current rate of Rs274.08 per litre at the depot level.

Officials said the price of petrol had gone down to about $95 per barrel from around $98.27 per barrel earlier in the international market, while the price of HSD had reduced to $97 from $99.12 per barrel. The prices of petrol and HSD had also dropped by Rs15.93 and Rs7.88 per litre, respectively, with effect from May 16.

The government has already achieved the Rs60 per litre petroleum levy—the maximum permissible limit under the law—on both petrol and HSD and collected Rs720bn in the first nine months ending March 31. The government had set a budget target to collect Rs869bn as petroleum development levy (PDL) on petroleum products during the current fiscal year under the commitments made with the International Monetary Fund (IMF).

Higher prices for petroleum and electricity are driving inflation. Petrol, mainly used in private transport like small vehicles, rickshaws, and two-wheelers, directly affects the budgets of the middle and lower-middle classes. High-speed diesel (HSD) prices are also very inflationary because HSD is used in heavy transport vehicles, trains, and farm machinery like trucks, buses, tractors, tube wells, and threshers, which increases the prices of vegetables and other food items.

The government currently charges around Rs82 per litre in taxes on petrol and HSD. Although there is no general sales tax (GST) on petroleum products, there is a Rs60 per litre petroleum development levy (PDL) on both petrol and HSD. Additionally, the government charges Rs50 per litre on high-octane blending components and 95RON petrol, along with a customs duty of about Rs19-20 per litre on petrol and HSD.

Petrol and HSD generate significant revenue, with monthly sales of around 700,000-800,000 tonnes, compared to just 10,000 tonnes of kerosene demand.