The government on Friday slashed the prices of petrol and high-speed diesel (HSD) for the next fortnight by Rs10.2 and Rs2.33, respectively.

In a notification, the finance ministry said the prices of petroleum products had seen a mixed trend in the international market in the last fortnight. It said Ogra had worked out the consumer prices based on the international market price variations.

It said the new petrol price was Rs258.16 per litre and that of HSD was Rs267.89.

The Prime Minister’s Office termed the reduction a gift from the premier on account of the upcoming Eidul Azha holiday.

Earlier, sources had said that the government was expected to pass on the impact of lower international prices to consumers. The prices of petrol and HSD had declined in the international market by about $3.75 and $2.7 per barrel, respectively, in the last two weeks.

This was on top of about $12 and $8 per barrel drop in the price of petrol and HSD, respectively, in the previous two fortnights.

The price of petrol had gone down to slightly over $90 per barrel from about $94 per barrel while the HSD price was reduced to $95 from $98 per barrel.

The import premium on petrol has slightly decreased in the last fortnight to $9.5 per barrel from $9.7. On the other hand, the value of the rupee has also remained stable.

Moreover, the final price also includes the Petroleum Development Levy (PDL), for which the government has already achieved the maximum permissible limit of Rs60 per litre under the law on both petrol and HSD.

This has contributed Rs720 billion to the government kitty in the first nine months of the fiscal year ending March 31.

The government had set a budget target to collect Rs869bn in PDL during the current fiscal year under the commitments made with the International Monetary Fund, which has now been revised to Rs960bn.

At present, the government is charging about Rs80 per litre tax on both petrol and HSD, including about Rs19-20 per litre customs duty.

This was despite the fact that the general sales tax is zero on all petroleum products.

Petrol and HSD are the major revenue spinners with their monthly sales of about 700,000 to 800,000 tonnes per month compared to just 10,000 tonnes of monthly demand for kerosene.

Petroleum and electricity prices have been the key drivers of the high rate of inflation. Petrol is mostly used in private transport, small vehicles, rickshaws and two-wheelers and has a direct bearing on the budget of the middle- and lower-middle class.

Additional reporting by Abdullah Momand.