On Sunday, the federal government reduced petrol prices by Rs10 per litre, diesel by Rs13.6 per litre, and light diesel by Rs12.12 per litre.
There was an expectation of a substantial decrease in petroleum prices, as the Oil and Gas Regulatory Authority (Ogra) had proposed a price cut in a summary submitted to the Prime Minister.
From September 1 to September 14, international crude oil prices fell by Rs8 to Rs12. The price of crude oil, which was $90 per barrel in April 2024, has now dropped to about $70 per barrel in September, reaching its lowest point in six months.
In response to this drop, Ogra, in coordination with the petroleum ministry, had recommended a price reduction of Rs6 to Rs10, aligning with the decrease in international prices.
Pakistan’s fuel prices are set according to a government-approved pricing formula. In the fiscal year budget, the government raised the maximum petroleum levy from Rs60 to Rs70 per litre, aiming to generate Rs1.28 trillion. This target is Rs150 billion higher than the previous year’s collection of Rs1.019 trillion and surpasses the budgeted target of Rs869 billion.
Currently, the government imposes around Rs78 per litre in taxes on petrol and high-speed diesel (HSD), plus approximately Rs8 per litre in customs duties, regardless of the source—whether locally produced or imported. Oil companies and their dealers also earn about Rs17 per litre in distribution and sales margins.
The finance ministry must finalize a staff-level agreement with the IMF before the Executive Board meeting on September 25, adhering to stringent IMF conditions.
Despite expectations for a significant reduction of Rs6 to Rs12, the government might only lower prices by Rs2 to Rs5 to ensure higher revenue.
Petrol and diesel prices in the country are currently Rs259.10 and Rs262.75 per litre, respectively. A minor price reduction was previously announced on August 31, effective until September 15.
Since May, petroleum prices in Pakistan have decreased by Rs47.54 per litre, according to Petroleum Minister Musadik Malik. He mentioned during a National Assembly session that while Pakistan buys fuel at international market rates, it receives a discount on the premium.
