For the second consecutive fortnight, prices of key petroleum products—petrol and high-speed diesel (HSD)—are expected to decrease by up to Rs9.20 per litre for the next fortnight in August, primarily due to a decline in international prices.
According to informed sources, the international prices of petrol and HSD have dropped by more than $3 per barrel over the past fortnight. Depending on the final exchange rate calculations and current tax rates, the price of petrol is projected to decrease by Rs8.50-9.30, while HSD may see a reduction of Rs8-9 per litre.
Officials noted that the average international price of petrol has fallen to $84 per barrel, with HSD also decreasing to around $91 per barrel in the last fortnight. Throughout the current fortnight, the import premium on both petrol and HSD remained steady at approximately $9 and $5 per barrel, respectively. However, the local currency slightly depreciated against the US dollar during this period.
Currently, the ex-depot price of petrol stands at Rs269.43 per litre, while HSD is priced at Rs272.77 per litre. During the last fortnightly review on July 31, the government reduced petrol and HSD prices by about Rs6.17 and Rs10.86 per litre, following an earlier increase of Rs17.44 and Rs15.74 per litre, respectively, in July. Previously, between May 1 and June 15, the prices of both petrol and HSD were reduced by approximately Rs35 and Rs22 per litre, respectively.
Kerosene and light diesel oil are also expected to see price drops of Rs10 and Rs5 per litre, respectively, over the next fortnight.
Petrol is predominantly used in private vehicles, small cars, rickshaws, and two-wheelers, directly impacting the budgets of the middle and lower-middle classes. On the other hand, the transport sector largely relies on HSD, and its price is considered inflationary, as it powers heavy transport vehicles, trains, and agricultural machinery such as trucks, buses, tractors, tube wells, and threshers, influencing the cost of vegetables and other essentials. However, reductions in petroleum prices are rarely reflected in transport fares and the prices of essential goods.
The government has increased the maximum petroleum levy limit to Rs70 per litre in the finance bill to raise Rs1.28 trillion in the next fiscal year, compared to Rs1.019 trillion collected in the previous fiscal year, which was almost Rs150 billion higher than the Rs869 billion budget target.
At present, the government is imposing around Rs78 per litre in taxes on petrol and HSD. Although the general sales tax (GST) is set at zero on all petroleum products, the government charges Rs60 per litre in petroleum development levy (PDL) on both products, which typically impacts consumers. Additionally, a customs duty of approximately Rs18 per litre is levied on both petrol and HSD, regardless of whether they are locally produced or imported. Moreover, around Rs17 per litre is allocated to oil companies and their dealers for distribution and sales margins.
