ISLAMABAD: The positive exchange rate gains might pave the way for a drop in petroleum rates for the third consecutive fortnight. Expectedly, there would be a reduction in the price of diesel & petrol by Rs 5 to Rs 18 per litre.
According to news reports, the price of High-Speed Diesel (HSD) would decrease by Rs5-6 per litre, and its overall rate would fall below Rs300 per litre. Note that HSD price conditions would depend on the decision of caretaker government whether or not to further increase the petroleum levy. As for the petrol rates, there could be a reduction of Rs18 per litre.
The possible reduction in petroleum products prices looked possible due to positive performance by the local currency. Over the last fortnight, the PKR gained about Rs3 against the dollar. Another reason can be a drop in the average price of diesel by about $1.3 per barrel.
Previously, the caretaker government of Anwaar-ul-Haq Kakar reduced petroleum rates twice during the year 2023 after a record increase in rates. The petrol and high-speed diesel prices crossed the historic mark of Rs331-333 per litre after a hike of Rs58.43 and Rs55.83 per litre during August & September.
Opportunity for Government to Increase the Petroleum Levy
The price drop has also provided the government with an opportunity to raise the petroleum levy (PL) on HSD to Rs60 per litre (the maximum permissible limit). Currently, the PL on HSD stands at Rs55 per litre. It is pertinent to mention that by October 2023, the revenue collections remained better than the targets.
The federal government has already applied a Rs60 per litre peak PL on petrol. During the current fiscal year, the government has to charge about Rs869 billion in PL on petroleum products. The target was set in line with the commitments made with the International Monetary Fund (IMF) and overall budget targets.
By the first quarter (that ended on September 30, 2023), the total PL collection crossed Rs222 billion.