The Pakistan government will likely reduce fuel prices by up to PKR 9.6 per liter for the upcoming fortnight, according to calculations received by Dot.
The government has already imposed the highest amount of petroleum development levy — PKR 70 per liter — budgeted for the current fiscal year. Therefore, unless it imposes a sales tax on petroleum products, the price of petrol and diesel is likely to be cut by PKR 9 and PKR 9.6 per liter, respectively. This is due to the decline in international crude oil prices.
The decline in prices came about following the trade war, which commenced from April 2 when the U.S. clamped duties on countries across the globe in a bid to reduce its trade deficit. While President Donald Trump later announced a 90-day pause in the imposition of tariffs, concerns of recessionary trends knocking the global economy down prevail.
The fallout has been heralded in crude oil prices which trimmed sharply. Brent was down by around 8% to trade around $66.68 a barrel while U.S. crude oil was down by 7.5% to $63.39 a barrel.
Similarly, the price of diesel was down by 5.6% to $78.35 and petrol by 7.6% to $71.51 per barrel, according to the data received from oil marketing companies and refineries.
With the reduction in fuel prices and electricity tariffs, the inflation rate is also likely to remain in check, potentially leading to a further cut in the benchmark interest rate.
Last fortnight, the government raised the petroleum development levy by PKR 10 per liter. The added tax collection helped the government to clip the electricity tariff by PKR 1.71 per unit with an overall tariff cut of PKR 7.41 per unit.
The tax collection from PDL has been around PKR 814 billion in nine months of the current fiscal year. The government set a collection target of PKR 1.28 trillion for the current fiscal year whereas in the preceding year collection was around PKR 1.019 trillion.
The collection would likely reach the target as in the last month, the government raised the PDL on HOBC to PKR 70 from PKR 50. Though the consumption of HOBC has been on the lower side, sales peaked in March as the difference with petrol price was quite narrow.
Total sales of petroleum products reached 1.217 million tons in March.
Notably, March saw record-high HOBC sales for any month, as OMCs introduced significant price discounts, reflected in the price gap between petrol and HOBC.
