Petrol price may be slashed by Rs6.48 per litre

Diesel rate, however, likely to surge by Rs13.84

ISLAMABAD:

Pakistan’s oil consumers are likely to get a relief of Rs6.48 per litre in the price of petrol for the first fortnight of July.

However, the price of high-speed diesel (HSD) may surge by Rs13.84 per litre, which will widely impact its consumers as HSD is primarily used in transport and agriculture sectors.

Any upward revision in the price of diesel sparks inflationary pressures owing to the increase in freight rates for goods transportation and rise in the cost of planting crops.

On the other hand, the expected reduction in the price of petrol, which is considered an alternative to compressed natural gas (CNG), will provide some relief to the motorists and bikers.

With the failure of Pakistan LNG Limited (PLL) to clinch import contracts, the provision of LNG to the CNG retail outlets, especially in Punjab, has encountered obstacles. Therefore, car owners are mainly dependent on petrol.

Industry sources indicate that the proposed changes in petrol and diesel prices are based on current rates of petroleum levy and general sales tax (GST). The petroleum levy has been fixed at Rs50 per litre for both petrol and HSD.

Apart from that, Pakistan State Oil’s exchange rate adjustment for petrol is estimated at Rs1.50 per litre and for diesel it stands at Rs1.45 per litre.

The government also imposes inland freight equalisation margin (IFEM) at the rate of Rs4.04 per litre on petrol and Rs3.79 per litre on diesel.

Furthermore, oil marketing companies get margins of Rs6 per litre on the sale of petrol (RON 92) and Rs5 per litre on HSD. Dealer’s commission on the sale of petrol and HSD currently stands at Rs7 per litre.

If approved, the decrease in petrol price will take its ex-depot rate to Rs255.52 per litre compared to the current market price of Rs262. However, the ex-depot price of diesel will soar to Rs266.84 per litre, up from the existing market rate of Rs253 per litre.

Similarly, the price of kerosene oil is expected to be increased by Rs5.41 to Rs169.48 per litre at the ex-depot stage.

Furthermore, the price of light diesel oil (LDO) may go up by Rs4.35 to Rs154.55 per litre.

These price revisions could impact households and industrial units relying on kerosene oil and LDO respectively.

It is important to note that final price adjustments may differ if the IFEM is changed by the Oil and Gas Regulatory Authority (Ogra). Additionally, due to the long Eid holidays, there is a possibility that the government will leave petroleum product prices at current levels.

Published in The Express Tribune, June 29^th, 2023.

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