Petrol prices to fall below Rs 300

Islamabad: The price of petrol and high-speed diesel in Pakistan is likely to decrease, potentially falling below Rs 300 per liter in the upcoming month.

This potential drop can be attributed to the significant decrease in global oil prices and the strengthening of the rupee.

In the forthcoming price review, high-speed diesel prices may see a reduction of Rs 20 per liter, while petrol prices could decrease by Rs 38 per liter.

However, it's worth noting that the caretaker government may make different decisions, especially regarding high-speed diesel, which currently carries a petroleum development levy of Rs 50 per liter, compared to Rs 60 for petrol.

The government's aim is to collect approximately Rs 869 billion in levies on petroleum products in line with the current fiscal year's budget goals and commitments to the International Monetary Fund (IMF).

If this scenario unfolds, it will mark the second consecutive time that the caretaker government has lowered petroleum product prices.

Previously, between August 15 and September 15, petrol and high-speed diesel prices had increased by Rs 58.43 and Rs 55.83 per liter, respectively.

During that period, the government imposed a tax of Rs 82 per liter on petrol and Rs 73 per liter on high-speed diesel.

Currently, General Sales Tax rates for all petroleum products are at zero.

However, the government imposes a Petroleum Development Levy of Rs 60 per liter on petrol and Rs 50 per liter on high-speed diesel, High Octane Blending Component, and 95 Research Octane Number (RON) petrol.

Since September 1, petrol and diesel prices have exceeded Rs 300 per liter.

Rising fuel costs, along with expensive electricity, have been significant contributors to consumer price hikes, driving inflation up to 31.4 percent in September.

Based on current tax rates and additional expenses, the price of petrol may decrease by Rs 36 to Rs 38 per liter as international prices have fallen by 12 percent, from $99 per barrel to $87 per barrel, and the rupee has improved by 4%.

In the past two weeks, the premium paid by Pakistan State Oil for securing import cargo has risen from $15 to $16.7 per barrel.

With these changes in mind, the ex-refinery price of petrol is expected to drop by more than Rs 38 per liter, making the ex-depot price approximately Rs 286 per liter for the next 15 days.

Conversely, high-speed diesel prices may rise by Rs 19 to Rs 20 per liter if the government opts to maintain the petroleum levy at Rs 50 per liter.

However, the finance ministry might advocate for increasing the levy by Rs 5 per liter to meet budget targets.

In this case, petrol prices could decrease by 14 to 15 rupees per liter.

Similar to petrol, high-speed diesel prices in the global market have decreased by approximately $8 per barrel, dropping from $122 to $114 per barrel in the last two weeks.