Major relief in diesel price expected:
The global market has caused a massive decline in diesel prices, which may prompt the government to provide significant relief to petroleum consumers in the first two weeks of April.
Sources suggest that the federal government plans to announce a reduction of up to Rs14 per litre in ex-depot fuel prices, effective from April 1, 2023, based on the current petroleum levy and general sales tax.
Diesel Price
People in the current high inflationary environment can expect a decrease of Rs14.31 per litre in the price of high-speed diesel (HSD), which will provide welcome relief.
The transport and agricultural sectors use diesel extensively, so a reduction in its price will particularly benefit farmers as the crop sowing season has started.
If the government passes on full price relief to the consumers, diesel will cost Rs278.66 per litre, as opposed to the current price of Rs293 per litre.
Additionally, oil marketing companies are projecting a reduction of Rs3.51 per litre in petrol prices.
In Punjab, where CNG outlets depend on imported gas, petrol is considered an alternative to compressed natural gas (CNG). However, during the recent winter, LNG was not available to them.
The government is developing a cross-subsidy program worth Rs120 billion to promote petrol consumption.
As part of this initiative, it plans to charge owners of luxury cars Rs50-per-litre more and grant the same amount of relief to owners of motorbikes and small cars.
The government now has an opportunity to decrease the price of petrol to provide relief to low-income and lower-middle-class consumers.
If the entire relief is passed on to consumers, the price of petrol will decrease from the current price of Rs272 per litre to Rs268.49 per litre. Similarly, the price of kerosene oil may drop by Rs13.46 per litre and light diesel oil (LDO) by Rs10.28 per litre.
Kerosene Oil
Kerosene oil is a significant household fuel for cooking and heating in remote areas. Its price may reduce from Rs190.29 per litre to Rs176.83 per litre.
The price of LDO may also decrease from Rs184.68 per litre to Rs174.40 per litre.
The price calculation is based on the cost of supply incurred by Pakistan State Oil (PSO).
The government may allow for an exchange rate adjustment of Rs6 per litre on petrol and Rs15 per litre on HSD.
In the last 13 days, the US dollar has appreciated by Rs4.66 against the Pakistani rupee.
To fulfill a condition of the International Monetary Fund, the government must increase the petroleum levy on HSD from Rs45 to Rs50 per litre, effective April 1.
Since November 2022, the government has already been charging a petroleum levy of Rs50 per litre on petrol.
Pavan Manzoor is an experienced content writer , editor and social media handler along with a track record of youth-oriented activities in Pakistan and abroad. She was selected as a fully-funded delegate as a leadership fellow in Turkey. She also led a team of 5 volunteers at the week-long Young Professionals Fellowship in Maldives. She is also a member of the Youth Standing Committee on Higher Education.
