Due to a bearish trend in the international market, petrol and high-speed diesel (HSD) prices are expected to decrease by approximately Rs6.50 to Rs7.50 per litre on May 31, despite a slight exchange rate loss.
Sources indicated that petrol and HSD prices in the international market fell by about $3.25 and $2.10 per barrel, respectively, in the last fortnight. This follows previous declines of $8.7 per barrel for petrol and $4.3 per barrel for HSD.
Based on the final calculation of the Inland Freight Equalisation Margin (IFEM), petrol prices are projected to decrease by Rs7.25 per litre, while HSD prices are expected to drop by Rs6.25 per litre. The import premium on petrol has decreased by about 7% in the last fortnight, dropping from $10.30 to $9.70 per barrel.
However, the rupee slightly depreciated by about 10 paise against the US dollar during the fortnight. The net impact is estimated to be a reduction of about Rs7 per litre in petrol price from the current ex-depot rate of Rs273.10.
The HSD price also dropped by about $2.10 per barrel in the international market, with its import premium, paid by Pakistan State Oil (PSO), remaining unchanged at $6.50 per barrel. Thus, the HSD rate is estimated to decrease by Rs6.25 per litre, subject to final exchange rate adjustment and IFEM in pricing, from the current rate of Rs274.08 per litre at the depot stage.
Officials noted that the price of petrol had fallen to about $95 per barrel from around $98.27 per barrel, while the price of HSD had decreased to $97 from $99.12 per barrel. Prices of petrol and HSD had also dropped by Rs15.93 and Rs7.88 per litre, respectively, effective from May 16.
The government has already reached the Rs60 per litre petroleum levy—the maximum limit under the law—on both petrol and HSD, collecting Rs720 billion in the first nine months ending March 31. The budget target is to collect Rs869 billion as a petroleum development levy (PDL) on petroleum products during the current fiscal year, as committed to the International Monetary Fund (IMF).
Higher petroleum and electricity prices have been driving inflation. Petrol is primarily used in private transport, small vehicles, rickshaws, and two-wheelers, directly affecting the budget of the middle and lower middle classes. In contrast, HSD prices are highly inflationary as HSD is mainly used in heavy transport vehicles, trains, and agricultural machinery like trucks, buses, tractors, tube wells, and threshers, significantly impacting the prices of vegetables and other essentials.
Currently, the government charges about Rs82 per litre in taxes on petrol and HSD. Although general sales tax (GST) is zero on all petroleum products, the government charges Rs60 per litre PDL on both products, and Rs50 per litre for high-octane blending components and 95RON petrol. Additionally, the government charges about Rs19-20 per litre customs duty on petrol and HSD.
Petrol and HSD are major revenue sources, with monthly sales of about 700,000-800,000 tonnes compared to just 10,000 tonnes of kerosene demand.
