Pakistan is set to see a notable decrease in the prices of petrol and high-speed diesel (HSD) on May 31. Informed sources indicate that these prices are likely to drop by approximately Rs6.50 to Rs7.50 per litre, despite a minor loss in the exchange rate.
In the last fortnight, petrol prices in the global market have declined by around $3.25 per barrel, while HSD has seen a decrease of $2.10 per barrel. This continues a downward trend from the previous fortnight, which saw petrol and HSD prices drop by $8.7 and $4.3 per barrel, respectively. The latest price projections, pending final calculations, suggest that petrol will decrease by Rs7.25 per litre and HSD by Rs6.25 per litre, influenced by the Inland Freight Equalisation Margin (IFEM).
The import premium on petrol has reduced by about 7 per cent over the past two weeks, from $10.30 to $9.70 per barrel. However, the Pakistani rupee has slightly depreciated by 10 paise against the US dollar during this period. Despite this, the net reduction in petrol price is expected to be around Rs7 per litre, bringing the ex-depot rate down from Rs273.10 per litre.
Similarly, the HSD price, which remained stable in terms of the import premium at $6.50 per barrel, is projected to fall by Rs6.25 per litre, subject to final adjustments, from the current rate of Rs274.08 per litre.
In recent weeks, the price of petrol has fallen to approximately $95 per barrel from $98.27 per barrel, and HSD has decreased to $97 per barrel from $99.12 per barrel. Earlier this month, petrol and HSD prices were reduced by Rs15.93 and Rs7.88 per litre, respectively.
The government’s collection of petroleum levies has reached its statutory limit of Rs60 per litre on both petrol and HSD, amassing Rs720 billion in the first nine months of the fiscal year ending March 31. The annual target for petroleum development levy (PDL) collection is Rs869 billion, as committed to the International Monetary Fund (IMF).
This adjustment in fuel prices arrives amid a period of high inflation driven by elevated petroleum and electricity costs. Petrol, commonly used in private transport and by the middle and lower-middle classes, directly impacts household budgets. HSD, essential for heavy transport, agriculture, and industrial engines, significantly influences the prices of essential goods, such as vegetables and other food items.
Currently, the government imposes around Rs82 per litre in taxes on both petrol and HSD. Although general sales tax (GST) on petroleum products is zero, the government levies Rs60 per litre as PDL on both fuels. Additionally, a higher rate of Rs50 per litre applies to high-octane blending components and 95RON petrol, alongside a customs duty of approximately Rs19-20 per litre on petrol and HSD.