November, 30, 2023
Petroleum Prices Slashed in Pakistan for Next Fortnight

Petroleum Prices Slashed in Pakistan for Next Fortnight

Infostani Sources- The Caretaker government has declared a decrease in the rates of all petroleum products by Rs2 to 9 per liter for the upcoming fortnight ending on November 30, citing reduced international market prices. In a late-night declaration, the finance ministry announced that the government, following the guidance of the Oil and Gas Regulatory Authority (Ogra), has opted to adjust the prices of petroleum products for the fortnight commencing November 16.

The government cut the price of petrol by Rs2.04 per litre and that of high-speed diesel by Rs6.47 per litre. The government reduced the prices of kerosene and light diesel by Rs6.05 and Rs9.01 per litre, respectively. As a result, the ex-depot price of high-speed diesel (HSD) dropped below Rs300 per litre after more than two months. The government has set the ex-depot price of HSD at Rs296.71 per litre instead of the current Rs303.18, reflecting a decrease of Rs6.47 per litre. The retail price at pumps, however, would be well around 298 per litre.

Fuel Price Adjustments Impact Transportation and Consumer Budgets

The majority of the transport sector relies on HSD, and its usage in heavy transport vehicles, trains, and agricultural engines such as trucks, buses, tractors, tube wells, and threshers significantly contributes to the inflation in the prices of vegetables and other food items.The decision sets the ex-depot price of petrol at Rs281.34 per litre for the next fortnight, a reduction of Rs2.04 from the current Rs283.38 per litre. Mainly used in private transport, small vehicles, rickshaws, and two-wheelers, this product directly impacts the budgets of the middle- and lower-middle class.

Similarly, the government has established the ex-depot price of kerosene oil at Rs204.98 per litre for the next 15 days, reflecting a decrease of Rs6.05 from the current rate of Rs211.03 per litre. The ex-depot rate for light diesel oil is now Rs180.45 per litre, reflecting a decrease of Rs9.01 per litre from the previous rate of Rs189.46 per litre. Unscrupulous elements primarily use kerosene for mixing with petrol and, to some extent, for lighting in remote areas, while flour mills and a few power plants consume LDO.

Petroleum Prices Slashed in Pakistan for Next Fortnight

Factors Impacting Fuel Prices and Petroleum Levy in Pakistan

Sources reveal that the petrol price should have decreased by Rs11 per litre, but the clearance of a letter of credit for one cargo on November 14 altered the situation. Although the pricing for the next fortnight should have factored in, we immediately calculated it. According to officials, HSD became cheaper by approximately $9 per barrel on average, decreasing from about $113 to $104 during the fortnight. In comparison, the price of petrol dropped by a dollar from $91 to $90. Meanwhile, the rupee lost Rs6 against the dollar, decreasing from Rs280 to Rs286.

The government has already reached the maximum permissible limit of Rs60 per litre in petroleum levy under the law. The government has set a budget target of Rs869 billion for petroleum levy collection during the current fiscal year, in accordance with its commitments to the International Monetary Fund (IMF.) The total petroleum levy collection surpassed Rs222 billion in the first quarter ending September 30, 2023, despite a gradual increase in per litre rates for petrol and almost unchanged rates at Rs50 per litre throughout the first quarter of the fiscal year.

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