ISLAMABAD: The prices of petroleum products are estimated to decrease by up to Rs17-40 per litre for the next fortnight mai­nly because of lower international oil prices.

Prime Minister Shehbaz Sharif has already announced early this week to reduce petroleum prices to pass on the benefit of lower crude prices to the people and had asked the Petroleum Division and the Oil and Gas Regulatory Authority (Ogra) to put up a formal summary in the regard.

Likewise, the ex-depot price of kerosene and light diesel oil (LDO) would be cut by Rs30 and Rs32 per litre, respectively. The kerosene price would thus stand at about Rs200 per litre from Rs231 and that of LDO would be around Rs194 instead of Rs226 per litre.

Informed sources told Dawn that based on existing tax rates and import parity price, the ex-depot price of petrol would be down by Rs17 per litre and that of high-speed diesel (HSD) by about Rs40.

With this cut, the petrol prices would come down to about Rs232 per litre from about Rs249 per litre at present while HSD price would also touch Rs235 per litre instead of Rs277.

These sources said the international price downfall was not only politically opportune for the sitting government ahead of by-elections in Punjab but could also provide a reasonable cushion to retain its small portion as a higher petroleum development levy (PDL), particularly on HSD, kerosene and LDO. At present, Rs5 per litre PDL is applicable on these three products compared to Rs10 per litre on petrol.

As such, these sources hinted that the government could increase PDL on HSD, kerosene and LDO by at least Rs5 per litre and still reduce the price of HSD by about Rs35 and those of kerosene and LDO by Rs25 per litre.

Under the deal with the International Monetary Fund, the government has to gradually increase PDL on products to a maximum of Rs50 per litre to collect Rs855bn during the current fiscal year. This is the first time the PMLN-led coalition government is reducing petroleum prices after it came to power about three months ago.

The petroleum levy had come to an end on March 1 price revision as international prices went up and the PTI government decided to not only reduce petroleum prices by Rs10 per litre but freeze it for the next four months i.e. until end-June 30. The PMLN-led coalition government had been increasing petroleum prices since May 15 under the IMF deal.

On June 30, the government revived PDL. The petrol prices have increased by 66pc to about Rs248.74 from Rs149.86 per litre bef­o­re May 26, showing an increase of Rs99 per litre

The ex-depot price of HSD had increased to Rs276.54 per litre on July 1, up by 92pc since May 26 from Rs144.15 per litre, up by 132.39 per litre. Likewise, the ex-depot price of kerosene had gone up to Rs230.26 per litre, up by 95pc since May 26 when it stood at Rs118.31, up by Rs111.95 per litre.

Similarly, the ex-depot price of LDO went up to Rs226.15 on July 1, up 80pc from Rs125.56 per litre on May 26, up by about Rs100.59 per litre.

The government has given an assurance to the IMF to gradually increase petroleum levy on all products by Rs5 per litre every month to a maximum of Rs50 per litre to achieve Rs855bn revenue target.

Published in Dawn, July 14th, 2022