ISLAMABAD: The government is expected to pass on the impact of lower international prices to consumers with a cut in the rates of petrol and high-speed diesel (HSD).
In the upcoming fortnightly review of prices on June 15, petrol is expected to go down by about Rs9 and HSD by Rs5 per litre.
International Market Influence
- Prices of petrol and HSD declined in the international market by about $3.75 and $2.7 per barrel, respectively, in the last two weeks.
- Previously, petrol and HSD prices dropped by $12 and $8 per barrel, respectively, in the previous two fortnights.
- Petrol price fell to slightly over $90 per barrel from about $94 per barrel, while HSD price reduced to $95 from $98 per barrel.
Local Pricing and Taxation
- The import premium on petrol slightly decreased to $9.50 per barrel from $9.70.
- The value of the rupee has remained stable, influencing the final calculation of prices.
- The final price will include the Petroleum Development Levy (PDL), with the government already achieving the maximum permissible limit of Rs60 per litre on both petrol and HSD.
- The government is charging about Rs80 per litre tax on both petrol and HSD, including about Rs19-20 per litre customs duty.
Fiscal Impact
- The government has contributed Rs720bn to the government kitty in the first nine months of the fiscal year ending March 31 through PDL.
- The budget target for PDL collection during the current fiscal year was set at Rs869bn, which has now been revised to Rs960bn.
Inflation and Economic Impact
- Petroleum and electricity prices have been key drivers of high inflation rates.
- Petrol is mostly used in private transport, small vehicles, rickshaws, and two-wheelers, directly affecting the budget of the middle- and lower-middle class.
- HSD price is considered highly inflationary as it is mostly used in heavy transport vehicles, trains, and agricultural engines, contributing to the prices of vegetables and other eatables.
