ISLAMABAD: Anticipated adjustments in petrol and high-speed diesel (HSD) prices are projected to be in the range of Rs5-9 per liter on January 31 for the upcoming two weeks, attributed to escalated international prices and import premiums. This is expected to counterbalance the impact of marginal gains in the exchange rate.
According to reliable sources, global prices for both major petroleum products, namely petrol and HSD, experienced an increase over the past fortnight. Additionally, the Pakistan State Oil (PSO) had to contend with higher import premiums despite the rupee showing improvement against the US dollar.
Consequently, the HSD price is expected to witness a rise of Rs4-6 per liter, while the price of petrol is forecasted to increase between Rs6.5 and 9 per liter, contingent on the final exchange rate calculations. The prices of kerosene and light diesel oil are anticipated to remain unchanged.
Officials highlighted that the price of petrol had decreased by more than $3 per barrel, reaching $86.5 from $83 per barrel in the last two weeks. In contrast, HSD became costlier by about $2 per barrel, increasing to $97.5 from approximately $95.6. Despite a gain of about Rs1.5 against the dollar to around Rs280 from Rs281 in the first half of January, PSO witnessed an increase in the premium paid for securing product cargoes on both products by $2 per barrel each. The premium rose from $4.2 to $6.5 per barrel for HSD and from $7.5 to $9.5 per barrel for petrol.
The government has already reached the maximum allowable limit of Rs60 per liter in petroleum levy — a limit set by law — on both petrol and HSD. The government’s budget target for collecting Rs869 billion as a petroleum levy on petroleum products for the current fiscal year, in line with commitments made with the International Monetary Fund (IMF), is expected to exceed Rs920 billion by the end of June.
Petroleum and electricity prices have been significant contributors to the high rate of Consumer Price Index (CPI)-based inflation, recorded at 29.7% in December 2023.
Petrol is predominantly used in private transport, small vehicles, rickshaws, and two-wheelers, directly impacting the budgets of the middle- and lower-middle class. Meanwhile, HSD, with its extensive use in heavy transport vehicles, trains, and agricultural engines, contributes to inflation, particularly affecting the prices of vegetables and other consumables.
Despite a zero general sales tax (GST) on all petroleum products, the government imposes a Rs60 per liter Petroleum Development Levy (PDL) on both products.
