Fuel prices likely to witness major fall

The price of all petroleum products is slated to fall by a staggering 14 rupees per litre for the upcoming fortnight. Credible reports link the expected drop in domestic petroleum prices with fluctuations in the international market and import premiums.

 
However, vehicle owners may not get to witness such a large fall in prices as Islamabad is expected to capitalise on the drop in prices. An official has revealed that the federal government could raise the levy on petroleum or even implement a carbon tax, which may not cause prices to drop as per analysts’ projections.

 
According to reports, the government intends to levy the aforementioned taxes to secure better terms on the $1 billion financing arrangement with the International Monetary Fund (IMF) under the climate adaptation and mitigation program. While this would benefit the national exchequer, businesses and citizens would remain unable to avail the benefits of ‘lower prices’.

If no additional taxes are implemented, the ex-depot price of petrol is expected to fall liberally by 14 rupees per litre. Kerosene and high-speed diesel (HSD) are estimated to fall by 10 rupees and 8 rupees per litre. Light diesel is expected to witness the most conservative drop in prices, with experts foreseeing a fall of 7 rupees per litre.

However, these are estimates and are subject to change based on the final calculations that authorities will conduct on March 15. These estimations were made after a notable drop in international rates was recorded.

As of publishing, Brent prices have dropped by over $4 per barrel over the previous 14 days. This has led analysts to project that the ex-depot price of petrol could settle close to 242 rupees per litre for the next 14 days. Similarly, the rate of HSD may decline to rest at approximately 250 rupees.

While the price of Kerosene is officially set at 168.12 rupees per litre, reports reveal that it is traded for upwards of 350 rupees per litre. The fuel with the lowest price post-projected adjustments is light diesel oil, with analysts believing that the commodity will be priced at 146 rupees per litre.

Islamabad charges a tax of approximately 76 rupees per litre on both HSD and petrol. The bulk of this tax, a staggering 60 rupees per litre, is charged under the category of a petroleum development levy, whereas the other charge of 16 rupees goes towards Customs duty.

The government reserves the right to increase the petroleum development levy by 10 rupees, after which it will sit at 70 rupees per litre. Pakistan does not charge consumers any general sales tax (GST) on petroleum products. However, fuel suppliers and distributors tack on an additional Rs17 per litre as markup.