Petrol, diesel may see a fall of up to Rs15

Published May 14, 2024
International prices of petrol and diesel dropped to $88 and $93 per barrel in the last fortnight from $96.6 and $97.5 in preceding period.—Online/file
International prices of petrol and diesel dropped to $88 and $93 per barrel in the last fortnight from $96.6 and $97.5 in preceding period.—Online/file

ISLAMABAD: Thanks to a significant drop in the international market, petrol and high-speed diesel (HSD) prices are expected to decrease by about Rs15 and Rs9 per litre on May 15 despite increased import premiums.

Informed sources said the prices of petrol and HSD had declined in the international market by about $8.7 and $4.3 per barrel, respectively, in the last fortnight. Depending on the final calculation of the inland freight equalisation margin (IFEM), the petrol price is projected to come down by Rs14.75 and HSD by Rs8.50 per litre.

The import premium on petrol increased by more than 7pc in the last fortnight to $10.30 per barrel. Earlier, it had dropped in two phases to $9.60 per barrel before April 30 from $13.50 per barrel in March. On the other hand, however, the rupee also gained about 20 paise against the dollar during the fortnight to Rs278.45 from Rs278.65. The net impact is estimated to be about Rs15 per litre reduction in petrol price from the existing rate of Rs288.49.

The HSD price also dropped by about $4.3 per barrel in the international market, and its import premium paid by the benchmark Pakistan State Oil (PSO) remained unchanged at $6.50 per barrel. Thus, the HSD rate was estimated to be down by Rs8.50-9.40 per litre, subject to final exchange rate adjustment and IFEM in pricing, from the current rate of Rs281.96 per litre at the depot stage.

Despite rise in import premiums, local prices are expected to see second fortnightly drop

Officials said the international market price of petrol had dropped to $88 per barrel from $96.6 per barrel earlier, while the HSD price had reduced to $93 from $97.5 per barrel.

The prices of petrol and HSD also dropped by Rs5.63 and Rs8.42 per litre, respectively, effective May 1.

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

High petroleum and electricity prices have been the key reason for unprecedented inflation. Petrol 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. On the other hand, HSD price is considered highly inflationary as it is 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 government charges about Rs82 per litre tax on petrol and HSD. Although the general sales tax (GST) is zero on all petroleum products, the government charges Rs60 per litre PDL on both products.

On the other hand, it is charging Rs50 per litre and high octane blending component and 95RON petrol. The government is also charging about Rs19-20 per litre customs duty on petrol and HSD.

Petrol and HSD are the major revenue spinners, with their monthly sales of about 700,000–800,000 tonnes compared to just 10,000 tonnes of monthly demand for kerosene.

Published in Dawn, May 14th, 2024

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