Petrol price in Islamabad may drop to Rs 11 despite Rupees 14% gain.
If the government maintains current tax rates, the price of three major petroleum products, including high-speed diesel (HSD), is expected to increase from Rs 5 to Rs 12 per litre on October 15 for the following two weeks,
Based on current tax rates, it is predicted that the ex-depot price of petrol will decrease by Rs10.75 per litre to roughly Rs214. In contrast, it is anticipated that the cost of HSD will rise by roughly Rs11.50 per litre, to about Rs247.
The cost of kerosene and light diesel oil (LDO) is predicted to increase by Rs4.50 and Rs7.50 per litre, respectively, to around Rs196 and Rs194 per litre.
The cost of importing HSD into Pakistan has grown as a result of the recent decline in benchmark international crude prices, which was accompanied by an increase in the refining margins and premiums on HSD due to refining capacity constraints.
Following production cuts declared by the major oil exporting nations, crude prices have begun to rise once more this week. However, these reductions will result in price changes starting on November 1st.
An official stated that the government could maintain the pricing of petrol and HSD through proportionate adjustments in petroleum development levy (PDL) on these two products, depending on Finance Minister Ishaq Dar’s comfort level in Washington.
In That Scenario
The gap on HSD would significantly widen while the PDL on petrol would move closer to the maximum level agreed upon with the IMF.
However, in such a scenario, it will be challenging for the government to implement significant increases in PDL on HSD over the following few months to achieve the desired Rs50 per litre.
Therefore, in the lead-up to the January and April deadlines for meeting the Rs50 per litre PDL limit pursuant to the IMF deal, the government would be required to follow the international pricing trend.
Currently
All major goods—including petrol, HSD, kerosene, and LDO—are GST-free as opposed to the usual 17 per cent. However, the government levies a petroleum tax of Rs. 32.42 per litre on petrol, Rs. 12.58 per litre on HSD, Rs. 15 per litre on kerosene, Rs. 10 on LDO, and Rs. 30 per litre on high octane blending component. Additionally, the government levies a customs fee of around Rs. 22 per litre on HSD and petrol.
In order to raise Rs855 billion during the current fiscal year, the government agreed to commit monthly PDL hikes of Rs 5 per month for both fuels—petrol and high-speed diesel—until they reach Rs 50 in January for petrol and Rs 25 in April for diesel.
Given the economic slump and floods’ severe impact on POL consumption, the aim suddenly seemed difficult to reach.
