Substantial cut in POL prices announced

The federal government announced a substantial reduction in the prices of petroleum products on Monday, with a view to passing on the benefits of a decline in the prices in the international market to the people.

According to a finance ministry statement, the price of petrol was slashed by Rs12 per litre, diesel by Rs30 per litre, and kerosene oil by Rs12 per litre. The price cut takes effect from Tuesday for the next fortnight.

Keeping in view the declining trend in the international market, the government had decided to reduce the existing prices of petroleum products to provide maximum relief to the people, the statement said.

According to the government announcement, the price of petrol comes down from Rs282 to Rs270 per litre. The high speed diesel (HSD) will now be available at Rs258 per litre against the previous rate of Rs288 per litre.

Petrol is used in motorbikes and cars. This is also an alternative fuel of compressed natural gas (CNG). The HSD is widely used in transport and agriculture sectors. Therefore, its reduction will have a healthy impact on agriculture, as the sowing season continued.

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The price of kerosene oil has also come down from Rs176.07 to Rs164.07 with a reduction of Rs12 per litre, while the light diesel oil (LDO) will be sold at Rs152.68 per litre against earlier price of Rs164.68 per litre.

Kerosene oil is used in remote areas, especially northern parts of Pakistan, for cooking purposes where liquefied petroleum gas (LPG) is not available. The Pakistan army is also a key user of kerosene oil in northern parts. The LDO is used in industry.

Finance Minister Dar hoped that the prices of other commodities would also come down with the reduction in the prices in petroleum products. He urged the transporters to reduce their fares for the benefit of the already burdened masses.

The government is currently charging maximum petroleum levy (PL) of Rs50 per litre on petrol, high speed diesel and high octane blending component (HOBC). This is the maximum rate the government had approved in the budget.

Therefore, the government did not have the space to adjust reduction in prices of petroleum products to generate more revenue. The revenue on account of petroleum levy goes to the federal government.

There was a space to increase the rate of general sales tax on the petroleum products. However, the receipts of sales tax go to the provinces, therefore, the government preferred to make a cut in prices of petroleum products amid current political situation.