On Wednesday, the federal government announced a reduction in the prices of petrol and high-speed diesel (HSD) by Rs2.04 and Rs6.47 per litre, respectively, for the next two weeks. The Ministry of Finance issued a notification stating that the new prices for petrol and HSD are now Rs281.34 and Rs296.71 per litre.
Additionally, the prices of kerosene oil and light-diesel oil have been decreased by Rs6.05 and Rs9.01 per litre, respectively, resulting in new prices of Rs204.98 and Rs180.45.
Earlier predictions by informed officials suggested a larger decline in petrol and HSD prices, ranging from Rs8 to Rs10 per litre, primarily attributed to lower international market prices. Over the past two weeks, international prices for both HSD and petrol had decreased. However, the depreciation of the rupee against the dollar during the same period offset some of the benefits of the lower international prices for consumers.
Officials explained that, on average, HSD had become about $9 per barrel cheaper, dropping from $113 to $104, while the price of petrol had decreased by a dollar from $91 to $90. Simultaneously, the rupee lost Rs6 in value against the dollar, falling from Rs280 to Rs286.
It’s worth noting that the government has already reached the maximum permissible limit of Rs60 per litre in the petroleum development levy (PDL), as mandated by law. The government aims to collect Rs869 billion as PDL on petroleum products for the current fiscal year, in line with commitments to the International Monetary Fund (IMF).
Despite a gradual increase in per-litre rates on petrol and nearly unchanged rates at Rs50 per litre for petrol in the first quarter of the fiscal year, the total PDL collection exceeded Rs222 billion in the first quarter ending September 30, 2023.
On October 31, the government kept petrol and HSD prices unchanged. Previously, between August 15 and September 15, petrol and HSD prices had surged by Rs58.43 and Rs55.83 per litre, respectively, reaching a historic high of Rs331 to Rs333 per litre at the retail stage until September 30. Subsequently, rates for petrol and diesel were reduced by Rs52 and Rs26 per litre, respectively, in two cuts with effect from October 1 and 16.
At present, the government imposes about Rs80 per litre tax on both petrol and HSD. Despite a zero general sales tax on all petroleum products, the government levies Rs60 per litre as PDL on both products.
