ISLAMABAD: The federal government on Friday announced a cut of around five per cent in the prices of all petroleum products for the next fortnight.

The relief, which has been extended after a tacit nod from the International Monetary Fund (IMF), was announced by Finance Minister Ishaq Dar at a news conference after consultation with Prime Minister Shehbaz Sharif.

The price of petrol has been cut by Rs12.63 per litre, bringing down the price from Rs237.43 to Rs224.80. The price of high speed diesel (HSD) has been reduced by Rs12.13 per litre from Rs247.43 to Rs235.30. The price of kerosene has been reduced by Rs10.19 per litre from Rs202.02 to Rs191.83. The rate of light diesel oil (LDO) has been cut by Rs10.78 per litre from Rs197.28 to Rs186.50.

Separately, the Oil & Gas Regulatory Authority has notified about 4.9pc reduction in LPG price for October. The prices will remain in place till October 15.

At present, the general sales tax (GST) is zero on all the key petroleum products including petrol, HSD, kerosene and LDO, against the normal rate of 17pc.

To pass on the relief to the consumers, the government took a hit on revenue by reducing the petroleum development levy (PDL) on petrol by Rs5 per litre to Rs32.42. However, the same has been increased by Rs5 per litre on HSD to Rs12.58.

Currently, the government is charging Rs12.58 per litre PDL on HSD, Rs15 per litre on kerosene, Rs10 on LDO and Rs30 per litre on High Octane Blending Component. Moreover, the prices of petrol and HSD also include Rs22 per litre custom duty.

On Thursday, the finance minister held a virtual meeting with IMF Mission Chief Nathan Porter and took him into confidence over the price cut in view of the flood situation and an earlier assurance by the Fund’s managing director to allow relaxations during PM Shehbaz’s visit to the US.

Under the deal with the IMF, the government had to gradually increase the PDL on petroleum products to a maximum of Rs50 per litre to collect Rs855bn during the current fiscal year.

The previous PTI government had committed a monthly PDL increase of Rs5 on petrol and HSD until it reached Rs50 in January for petrol and April for diesel.

However, before the former prime minister’s ouster, he reduced the PDL to zero on March 1. As the international prices went up and the PTI government not only reduced the petroleum prices by Rs10 per litre but also froze them for the next four months.

After coming to power in April, the PML-N-led coalition government refrained from increasing the prices immediately. However, since May 15, the government has been increasing the prices in line with the IMF deal. As Pakistan battled with the flood catastrophe, the government had requested the IMF managing director for a three-month freeze on the PDL and fuel cost on electricity.

Published in Dawn, October 1st, 2022