Prime Minister Shehbaz Sharif on Saturday approved cuts in the price of petrol and high-speed diesel (HSD) by Rs1.86 and Rs3.23, respectively, for the next fortnight in a “big relief” for the masses.

A statement issued by state broadcaster PTV said the petrol price was now Rs259.1 per litre and Rs262.75 for HSD.

The price of kerosene oil was also slashed by Rs2.15 to Rs169.62 per litre and light diesel oil by Rs2.97 to Rs154.05 per litre.

Prices of petrol and HSD were previously estimated to drop by around Rs5-6 per litre mainly because of the lower international market for the next fortnight starting September 1.

Informed sources had said the prices of petrol and HSD had decreased in the international market by $2 to $2.30 per barrel in the last fortnight.

Officials said the average price of petrol had dropped in the international market to about $80.40 per barrel from about $82.5 per barrel. Over the last fortnight, HSD declined to about $88 per barrel from $90.3.

During the current fortnight, the import premium on petrol dropped by about 50 cents per barrel to $8.50 while that on HSD remained unchanged at $5 per barrel. On the other hand, the local currency gained value against the US dollar by 25 cents during the fortnight.

The government has jacked up the maximum limit of petroleum levy to Rs70 per litre in the finance bill to collect Rs1.28 trillion in the next fiscal year against Rs1.019tr collection during the last fiscal year, almost Rs150bn higher than the Rs869bn budget target.

Currently, the government is charging about Rs78 per litre tax on petrol and HSD. Although the general sales tax is zero on all petroleum products, the government charges Rs60 per litre petroleum development levy on both products, which usually impacts the masses.

The government also charges about Rs18 per litre custom duty on petrol and HSD, irrespective of their local production or imports. In addition, about Rs17 per litre distribution and sale margins are going to oil companies and their dealers.