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Sunday, April 14, 2024

Government Announces Significant Cut in Petroleum Prices

The caretaker government in Pakistan reduces petroleum prices by up to Rs14 per litre, responding to a significant drop in global oil prices and a strengthening rupee against the US dollar, providing relief for consumers and various sectors.

The Finance Division has declared a substantial reduction in the prices of petroleum products for the upcoming fortnight, spanning from December 16 to December 31. This decision follows the recommendations put forth by the Oil and Gas Regulatory Authority (Ogra). The revised rates indicate a noteworthy decline in petrol prices to Rs267.34 per litre and a substantial reduction of Rs13.50 per litre in the diesel rate, now standing at Rs276.21 per litre.

Moreover, the cost of kerosene oil has been reduced by Rs10.14 per litre, resulting in a new price of Rs191.02. Additionally, light diesel oil will now be priced at Rs164.64 per litre after a notable reduction of Rs11.29. The Finance Division’s statement attributes the anticipated decrease in fuel prices to the recent substantial drop in global oil prices over the past two weeks.

The caretaker federal government, acting upon the guidance of the Oil and Gas Regulatory Authority, has announced a significant reduction in the prices of petroleum products for the next fortnight. The latest notification from the Finance Division reveals a considerable drop in petrol prices, down to Rs267.34 per litre from the previous Rs281.34 per litre, marking a Rs14 reduction. Additionally, high-speed diesel sees a substantial decrease of Rs13.50 per litre, now priced at Rs276.21.

This decision is expected to bring relief to consumers, especially in Punjab, where petrol serves as an alternative to compressed natural gas (CNG). Moreover, the reduction in diesel prices is likely to have a positive impact on the inflation rate and provide relief to the transport and agriculture sectors, significant users of diesel in Pakistan.

Global Factors and Local Adjustments Influence Petroleum Prices

Globally, the prices of both petrol and high-speed diesel (HSD) have experienced a decline of 5.5% over the past fortnight. This trend is attributed to a significant drop in global oil prices and a marginal strengthening of the Pakistani rupee against the US dollar. The HSD became cheaper by approximately $4 per barrel on average, from about $99.50 to $95.50. Simultaneously, petrol prices decreased from $86.5 to $81.7. The Pak rupee also gained against the US dollar during this period, reaching Rs284 from 285.5 on December 1.

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Furthermore, the government maintained the petroleum levy (PL) at the maximum limit of Rs60 per litre on both petrol and HSD, with no GST levied on these products. Adjustments were made in the inland freight equalization margin (IFEM) and dealers’ margins to accommodate the reduction in petroleum prices.

In December, Attock Refinery Limited (ARL) faced challenges, leading to the shutdown of two crude distillation plants due to reduced off-take of finished products by oil marketing companies (OMCs). ARL highlighted the poor upliftment of its petrol and diesel production by OMCs, who were favoring the sale of imported products. This development was communicated in a letter by ARL on December 7, 2023, pointing to the complexities faced by the oil industry.