Petrol price slashed by Re1

Islamabad has decided to slash the price of petrol by one rupee per liter for the upcoming fortnight. As per reports, the price of petrol now rests at 254.63 rupees per liter after the cut.

However, the price of high-speed diesel (HSD) will not change and remains anchored at 258.64 rupees per liter. A notification from the finance division has revealed that the Oil and Gas Regulatory Authority (OGRA) calculated the new consumer prices based on price fluctuations in the international market.

At the previous price revision consideration on March 15, the federal government decided to not decrease the prices of petroleum products. Instead of passing on relief to the domestic consumers, the government decided to levy an additional 10 rupees per liter petroleum tax.

This marks the second consecutive period during which the price of HSD has remained unchanged. During Ogra’s price revaluations during the previous fortnight, the price of kerosene oil stood at 168.12 rupees per liter, while the price of light diesel oil sat at a more conservative 153.34 rupees per liter.

According to credible reports, this price notification was released after the Prime Minister’s (PM) office revealed that Shehbaz Sharif intended not to slash petroleum prices despite a drop in the price of commodities in the international market. Brent crude oil futures prices dropped by 0.22 percent over the past month. However, Brent prices have started a rally over the past three weeks - reportedly because of the USA’s sanctions on Venezuela and Iran.

Given the change in international prices, Ogra and the petroleum division had estimated that a cut of 13 rupees per liter was possible to provide relief to petroleum consumers. However, lawmakers and key government officials decided to transfer this relief to electricity users instead.

Previously, Islamabad would charge a tax of approximately 76 rupees per litre on both HSD and petrol. The bulk of this tax is comprised of the petroleum development levy (PDL), which used to sit at 60 rupees per litre, whereas the other charge of 16 rupees goes towards customs duty.

As per the petroleum division, the PDL on High octane blending component has been increased by 20 rupees per liter, causing it to rest at a staggering 70 rupees per liter.

The government has also hiked the PDL on petrol and HSD by 10 rupees for retail sales, after which the levy rests at 70 rupees per litre for both commodities. However, reports suggest that direct sales are incurring a larger PDL of 78.64 rupees per liter.

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.