Thursday, July 18, 2024

Anticipating the Drop in Petrol Prices Starting January 16th

Petrol prices in Pakistan are poised for a significant decrease, expected to be up to Rs10 per liter, while diesel is anticipated to witness a reduction of Rs2 per liter for the forthcoming 15 days, starting January 15. This adjustment is influenced by several factors, including the global downturn in petroleum prices, the strengthening of the Pakistani rupee against the US dollar, and a decrease in the premium on petroleum products.

Presently, the price of petrol in Pakistan stands at Rs267.34 per liter, with diesel priced at Rs276.21 per liter. Over the last 15 days, global petroleum product prices have notably declined, the value of the rupee against the dollar has increased, and the premium associated with purchasing petrol has decreased.

In the global market, petrol prices dropped from $84.50 per barrel to $83 per barrel, while diesel prices decreased from $97 per barrel to $95.85 per barrel during the specified period. Simultaneously, the Pakistani rupee appreciated against the US dollar, settling at Rs280.40 on the last trading day of the week, compared to around Rs283 in the last week of December.

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There is a strong likelihood of a substantial decrease in petrol prices by at least Rs9 per liter and a Rs2 per liter reduction in diesel prices. Additionally, kerosene and light diesel oil prices are anticipated to see a decrease of around Rs2 per liter.

It is pertinent to note that the government currently imposes the maximum allowable petroleum levy of Rs60 per liter on both petrol and diesel.

Initially targeting to collect Rs869 billion through petroleum levy for the fiscal year 2024 with the IMF, it is now anticipated that this figure may exceed Rs950 billion by June.

Petroleum product prices and electricity rates have a significant impact on inflation, which reached 29.7 percent in December. The government currently imposes approximately Rs82 per liter in taxes on both petrol and diesel, with a zero general sales tax on all petroleum products.

However, the government collects Rs60 per liter in petroleum development levy and Rs50 per liter in levy on diesel, high octane blending component, and 95 research octane number (RON) petrol.

It’s noteworthy that the government had decided to maintain unchanged prices for petrol and diesel at the beginning of the new year.

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