ISLAMABAD: The prices of all petroleum products are estimated to fall by up to Rs14 per litre for the next fortnight, ending March 31, owing to fluctuation in the international market and import premiums.

This relief is, however, subject to unchanged tax rates. An official said there were considerations on the part of the government to absorb a part of the price cushion to increase petroleum levy or impose carbon tax for securing cheaper additional $1bn financing from the International Monetary Fund (IMF) for climate adaptation and mitigation.

Based on existing tax rates, the informed sources said the ex-depot price of petrol was estimated to go down by about Rs14 depending on the final calculation on March 15, followed by Rs8 per litre cut in high-speed diesel (HSD), Rs10 per litre in kerosene and light diesel by about Rs7 per litre.

The estimates for lower petrol prices stem from some decline in its international rates and import premiums. The benchmark Brent prices had decreased by about $3 per barrel during the last 10 days.

The ex-depot petrol price currently stands at Rs255.63 per litre and is estimated to drop to about Rs242. The current rate for HSD is Rs258.64 per litre, which will come down to about Rs250. Kerosene’s official rate is Rs168.12 per litre, but it is sold at Rs300-350 on the market. The price of light diesel oil is expected to be reduced to Rs146 in the next fortnight from Rs153.34.

Petrol is mainly used in private transport, small vehicles, rickshaws, and two-wheelers, and it directly affects the budget of the middle and lower middle classes. Most of the transport sector runs on HSD. Its price is considered inflationary as it is primarily 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 Rs76 per litre tax on petrol and high-speed diesel. Although the general sales tax (GST) is zero on all petroleum products, the government charges Rs60 per litre petroleum development levy (PDL) on both products, which normally impacts the masses. Under the law, the government has the cushion to increase PDL to a maximum of Rs70 per litre.

The government also charges about Rs16 per litre of customs duty on petrol and HSD, regardless of their local production or imports. In addition, about Rs17 per litre distribution and sale margins are charged by oil companies and their dealers on both products.

Published in Dawn, March 13th, 2025