ISLAMABAD – The caretaker government is expected to announce a reduction in petrol and high-speed diesel (HSD) prices, potentially bringing them below Rs300 per liter in the upcoming review. This development comes after a period of consecutive fortnightly increases that saw fuel prices reach historic highs of Rs331-333 per liter.
The anticipated price drop is attributed to a substantial 12 percent decrease in international oil prices and a strengthening of the rupee against the US dollar. The price of oil has fallen from $99 per barrel to $87, while the rupee has appreciated by more than 4 percent against the US dollar.
These changes could result in a decrease of up to Rs38 per liter for petrol and Rs22 per liter for HSD. However, the final decision rests with the caretaker government, which may choose to maintain current prices, especially for high-speed diesel.
Fuel prices have been a major contributor to the country’s inflation, which reached 31.4 percent in September. The potential reduction in fuel prices could help curb this rising trend, providing some relief to consumers, particularly those in the middle and lower-middle-class segments.
It’s important to note that the government imposes a tax of approximately Rs82 per liter on petrol and Rs73 on high-speed diesel.
Additionally, there is a petroleum development levy of Rs60 per liter on petrol and Rs50 per liter on HSD. These levies are significant revenue sources for the government, and any changes in fuel prices will directly impact various sectors of the economy and household budgets.
The government aims to collect around Rs869 billion in levy on petroleum products to meet the budget target and commitments made with the International Monetary Fund (IMF) for the current fiscal year. Therefore, the upcoming review of fuel prices will be closely watched by all stakeholders.