Fuel prices may finally come down after two months

Published September 28, 2023
An employee updates the fuel prices at a fuel station in Karachi on August 16. — AFP/File
An employee updates the fuel prices at a fuel station in Karachi on August 16. — AFP/File

ISLAMABAD: The prices of high-speed diesel (HSD) and petrol are estimated to be reduced by about Rs15-19 per litre for the Oct 1-15 period, in what could be the first decrease in two months, mainly because of the rupee’s appreciation.

The prices of the two essential fuels were last cut in mid-July when petrol was reduced by Rs9 per litre to Rs253 and diesel by Rs7 per litre to Rs253.50.

Sources told Dawn that based on the existing tax rates and other overheads, the petrol price could come down by Rs15-19 per litre in the upcoming review because of about a 2pc reduction in its international price from $101 to $99 per barrel and around Rs10.5 rise in the rupee’s value against the US dollar.

The calculation is based on the actual impact in the first 12 days of September and estimates for the last two days. Petrol is mainly used in private transport, small vehicles, rickshaws and motorcycles and directly affects the budget of the middle- and lower-middle classes.

Petrol, diesel rates may fall by up to Rs12 and Rs19 per litre, respectively

Similarly, the HSD’s price could also go down by Rs9-12 per litre if the government decides to maintain the petroleum levy at Rs50 per litre. However, if the finance ministry increases the levy by Rs5 per litre to meet the budgetary target, the diesel price would be cut by Rs5-8 per litre.

Unlike petrol, the HSD’s price in the international market rose by about $1 per barrel to $122 in recent weeks.

Most of the transport sector runs on this kind of diesel. Its price is considered highly inflationary, as it is mostly used in heavy transport vehicles, buses, trains and agricultural engines like trucks, tractors, tube wells and threshers. The fuel particularly adds to the prices of vegetables and other eatables.

This will be the first opportunity for the caretaker government to reduce petroleum prices. Between Aug 15 and Sept 15, petrol and high-speed diesel prices jumped by Rs58.43 and Rs55.83 per litre, respectively. Both products are currently selling for Rs331-333 per litre at the retail stage.

At present, the GST is zero on all petroleum products, but the government is charging Rs60 per litre petroleum development levy on petrol and Rs50 per litre each on HSD and high-octane blending component and 95 RON (Research Octane Number) petrol. The government is also charging about Rs22-23 per litre customs duty on petrol and HSD.

Published in Dawn, September 28th, 2023

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