There is great relief as the government lowers the price of petrol by 40 rupees per litre

Govt reduces petrol price by Rs40 per liter, effective today

The federal caretaker government has drastically lowered gasoline prices, by as much as Rs. 40 per liter, giving much-needed assistance to those who have suffered the most from a difficult economic crisis since mid-2022.

As of today, October 16, the cost of gasoline has decreased from Rs323.38 per liter to Rs283.38 per liter. This decrease is consistent with shifts in the price of crude oil on the world market and the strengthening of the Pakistani rupee against the US dollar.

Compressed natural gas (CNG) is typically replaced by gasoline in motorcycles and automobiles, particularly in the Punjab province where CNG retail stores do not have indigenous gas.

In Punjab, CNG retail shops use liquefied natural gas (LNG), however, Pakistan Petroleum Limited (PPL) has been unable to import LNG for the past few years, making it inaccessible.

Since 2015, the private sector has attempted to import LNG, but gas utilities have obstructed these attempts, ostensibly to preserve their monopoly.

The price of high-speed diesel (HSD) has also been decreased by the government by Rs15 per liter, from Rs318.18 to Rs303.18 per liter. This price cut for HSD, which is mostly utilized in the transportation and agricultural industries, may to some extent reduce inflation.

Kerosene oil is frequently used in stoves, especially in rural areas like the country’s north. Kerosene oil is also extensively used by the Pakistani Army.

The government has raised the fuel tax on HSD from Rs50 to Rs55 per liter, an increase of Rs5 per liter. Petrol is subject to a 60 rupee per liter fuel levy.

However, these two petroleum products are exempt from all government sales taxes. The provinces receive the proceeds of the sales tax, while the federal government receives the proceeds of the petroleum levy. This explains why the national government eliminated the sales tax while raising the fuel levy.

A petroleum tax of Rs. 50 per liter on the high-octane blending component (HOBC) and Rs. 32.56 per liter on E-10 gasoline is also levied by the government. 90% regular unleaded and 10% ethanol, a result of natural plant fermentation, make up E-10 gasoline, a biofuel.

According to some estimates, the government receives a monthly petroleum levy payment from oil consumers of about Rs75 billion.

According to sources, the petroleum product prices on Platts, a website that provides pricing benchmarks for the oil industry, have dropped dramatically, and the Pakistani rupee has appreciated against the US dollar. The Pakistani rupee has appreciated by an average of Rs7.50 against the US dollar during the last two weeks.

On Platts, the average price of gasoline is Rs233.49 per liter, and the average price of HSD is Rs305.93 per liter, both including incidentals and duties.

An adjustment for currency losses of Rs0.74 per liter of gasoline has been awarded to Pakistan State Oil (PSO), which is in charge of importing petroleum goods.

Additionally, the government has increased dealer margins on gasoline and diesel by Rs0.41, bringing them from Rs7.82 to Rs8.23 per liter.

Oil marketing companies (OMCs) have seen their margins increase by Rs0.33 per liter, from Rs7.08 to Rs7.41 per liter on petrol, and by Rs0.47 per liter on HSD, from Rs6.94 to Rs7.41 per liter.