ISLAMABAD: The government on Wednesday reduced fuel prices by Rs5 to 8 per litre for the next fortnight in line with the global market trend.

In a video address, Finance Minister Ishaq Dar said the price of petrol had been reduced by Rs8 per litre, whereas the price of high-speed diesel — the most inflationary item — and that of light diesel oil (LDO) was cut by Rs5 each. The rate of kerosene, however, has been left unchanged.

It’s the second consecutive reduction in the price of petrol and the third for high-speed diesel.

The minister said the government had tried to create “as much room as possible to provide relief to the people” even though global oil prices didn’t change substantially and neither had the rupee appreciated against the dollar in the last 15 days.

He said that since May 16, the government had reduced the price of HSD by Rs35 per litre and that of petrol and LDO by Rs20 and Rs17, respectively.

After the latest revision, the ex-depot price of high-speed diesel has fallen to Rs253 per litre for the next fortnight, down by Rs5 (1.9pc).

An increase in the price of HSD is considered highly inflationary as it’s mostly used in heavy transport vehicles, trains and agricultural engines like trucks, buses, tractors, tube wells and threshers and particularly adds to the prices of vegetables and other eatables.

The ex-depot price of petrol has dropped to Rs262 per litre for the next fortnight, down Rs8 (2.9pc). The product is mostly used in private transport, small vehicles, rickshaws and two-wheelers and has a direct bearing on the budget of the middle- and lower-middle class.

The ex-depot rate of light diesel oil — consumed by flour mills and a couple of power plants — has been cut by Rs5 (3.2pc) per litre to Rs147.68.

The ex-depot price of kerosene has been kept unchanged at Rs164.07 per litre. This fuel is mostly used by unscrupulous elements for mixing it with petrol and to some extent for cooking, lighting and heating by the people living in remote areas.

At present, the general sales tax is zero on all four key petroleum products. The government is, however, charging a petroleum development levy of Rs50 per litre on petrol and HSD, besides about Rs18-22 customs duty.

Petrol and high-speed diesel are the major revenue spinners for the government, with monthly sales of about 700,000 to 800,000 tonnes. In contrast, the monthly demand for kerosene and LDO is 10,000 and 2,000 tonnes, respectively.

Published in Dawn, June 1st, 2023