After two consecutive increases, petrol and high-speed diesel (HSD) prices are expected to decrease by approximately Rs3 and Rs8.50 per litre, respectively, starting August 1, due to lower international market prices and reduced import premiums.
Informed sources indicated that in the past fortnight, international prices for these major products have fallen by around $2 and $3 per barrel, respectively.
Based on final calculations and current tax rates, the petrol price is projected to decrease by Rs2.90 and HSD by Rs8.50 per litre.
Officials reported that the average international price of petrol has dropped to $87.50 from $89.50 per barrel, while HSD has decreased to $94 from about $96.93 per barrel over the last fortnight.
Relief is expected to be Rs2.90 for petrol and Rs8.50 for high-speed diesel.
During the current fortnight, the import premium on both products has also decreased, falling to $8.80 from $9 on petrol and to $5 from $6.50 per barrel on HSD. Meanwhile, the exchange rate has remained stable.
The government has raised the maximum limit of the petroleum levy to Rs70 per litre in the current Finance Bill to collect Rs1.28 trillion in the next fiscal year, up from Rs960 billion collected in the last fiscal year, nearly Rs91 billion more than the Rs869 billion budget target.
The ex-depot petrol price is currently Rs275.60, and HSD is Rs284 per litre. With the new rates, petrol will remain above Rs272, while HSD will be close to Rs275 per litre, provided the government does not increase the petroleum levy.
Petrol is mainly used in private transport, small vehicles, rickshaws, and two-wheelers, directly impacting the budgets of middle- and lower-middle-class households. Conversely, most of the transport sector relies on HSD, which is considered inflationary since it is used in heavy transport vehicles such as trains, trucks, buses, tractors, tube wells, and threshers, affecting the prices of vegetables and other essentials.
However, a reduction in petroleum prices rarely translates into lower fares and prices for essential commodities.
The prices of petrol and HSD had increased by Rs7.45 and Rs9.56 per litre, respectively, on June 30, followed by an increase of Rs9.99 and Rs6.18 per litre for petrol and HSD, respectively, on July 16. Thus, petrol and diesel rates cumulatively rose by Rs17.44 and Rs15.74 per litre, respectively, this month.
Between May 1 and June 15, the prices of both products had decreased by about Rs35 and Rs22 per litre, respectively.
The government charges around Rs78 per litre in taxes on both petrol and HSD. Although GST is zero on all petroleum products, the government levies Rs60 per litre PDL on both products, which typically affects the masses.
