Pakistan’s Bold Move: Slashes Petrol and Diesel Prices

Samina Mustafa
MPhil Scholar
Pakistan’s Bold Move: Slashes Petrol and Diesel Prices
In a recent announcement, the government of Pakistan has implemented a noteworthy reduction in the prices of various petroleum products, ranging from 4.6% to 6.4% (equivalent to Rs10 to Rs14 per litre), and effective until December 31. This decision stems from the combination of lower international market prices and favorable exchange rate gains.
In a late-night statement, the Ministry of Finance conveyed that the government, in alignment with the recommendations put forth by the Oil and Gas Regulatory Authority, opted to recalibrate the prices of petroleum products for the forthcoming fortnight commencing on December 16.
According to the official notification, the ex-depot price of petrol underwent a significant reduction of Rs14 per litre (4.9%), settling at Rs267.34 per litre compared to the existing rate of Rs281.34 per litre. Similarly, the ex-depot price of high-speed diesel (HSD) experienced a decrease of Rs13.50 per litre (4.65%), resulting in a new rate of Rs276.21 per litre, down from Rs289.71.
Furthermore, the ex-depot kerosene price witnessed a decrease of Rs10.14 per litre (5%), now standing at Rs191.02 per litre, compared to the previous rate of Rs201.16. Additionally, the price of light diesel oil (LDO) saw a reduction of Rs11.29 per litre (6.4%), reaching Rs164.64 per litre as opposed to the previous Rs175.93 per litre.
This adjustment in prices is attributed to the recent decline in international prices of both HSD and petrol, each experiencing a nearly 5% drop over the past fortnight. Concurrently, a minor recovery in the value of the rupee against the dollar contributed to a reasonable decrease in domestic prices for consumers.
Officials responsible for price calculations highlighted that HSD became more affordable by approximately $4 per barrel on average, decreasing from about $99.50 to $95.50 during the week. Similarly, the price of petrol witnessed a decline of one dollar. The rupee exhibited a positive trend against the dollar, reaching Rs284 on December 13, compared to approximately Rs285.5 at the beginning of December. During the same period, the benchmark Brent oil dropped from $79 per barrel to $73.
It’s worth noting that the government has already reached the maximum permissible limit of Rs60 per litre in petroleum levy, as mandated by law, for both petrol and HSD. The budgetary target for petroleum levy collection during the current fiscal year, as per commitments with the International Monetary Fund (IMF), is set at Rs869 billion. However, the government anticipates the collection to exceed Rs950 billion by the end of June.