ISLAMABAD: For the third consecutive fortnight, the prices of major petroleum products—petrol and high-speed diesel (HSD)—are projected to decrease by approximately Rs5-6 per litre starting September 1. This decline is attributed to lower international market prices.
Sources indicate that the prices of petrol and HSD fell by $2 to $2.30 per barrel in the past fortnight. Based on the final exchange rate and current tax rates, a reduction of Rs5 to Rs5.50 per litre is anticipated for both products.
Currently, the average price of petrol on the international market is around $80.40 per barrel, down from $82.50 per barrel. HSD has decreased to about $88 per barrel from $90.30. During this period, the import premium for petrol dropped by about 50 cents per barrel to $8.50, while the premium for HSD remained at $5 per barrel. Additionally, the local currency appreciated by 25 cents against the US dollar.
The ex-depot prices are currently Rs260.96 per litre for petrol and Rs266.07 per litre for HSD. In the last review on August 14, the government reduced petrol and HSD prices by Rs8.47 and Rs6.70 per litre, respectively. Over the past two fortnights, the total reduction in petrol and HSD prices has been Rs14.64 and Rs17.56 per litre, respectively, including reductions of Rs6.17 and Rs10.86 per litre on July 31.
In contrast, petrol and HSD prices increased by Rs17.44 and Rs15.74 per litre in early July. From May 1 to June 15, the prices of both products were reduced by about Rs35 and Rs22 per litre.
Petrol, primarily used in private transport, small vehicles, rickshaws, and two-wheelers, significantly impacts the budget of middle and lower-middle-class families. HSD, used in heavy transport, trains, and agricultural engines, affects inflation and the prices of essential commodities.
Despite the drop in petroleum prices, adjustments in fares and essential commodity prices are often slow. The government has increased the maximum petroleum levy to Rs70 per litre in the finance bill to collect Rs1.28 trillion in the next fiscal year, up from Rs1.019 trillion collected last year.
Currently, the government imposes approximately Rs78 per litre in taxes on petrol and HSD, including a Rs60 per litre petroleum development levy (PDL). The general sales tax (GST) on petroleum products is zero, but there is a Rs18 per litre customs duty on both petrol and HSD, and about Rs17 per litre in distribution and sale margins going to oil companies and dealers. Additionally, Rs50 per litre is charged on light diesel and high-octane blending components used in luxury imported vehicles.
