Pakistan is poised to see a substantial reduction in petroleum prices starting June 1, 2024, driven by a notable decline in international oil prices.
The country, which reviews petroleum prices on a fortnightly basis, last adjusted prices on May 15, 2024, resulting in significant cuts.
As global oil prices continue their downward trend, the government is likely to announce further reductions in its next review on May 31, 2024. According to informed sources, petrol prices are expected to decrease by Rs4.50 per litre, while high-speed diesel (HSD) prices might drop by approximately Rs4 per litre. These adjustments will come into effect from the beginning of June.
The recent decline in international oil prices has been substantial. As of May 24, 2024, global petrol prices have decreased by $1.68 per litre compared to two weeks prior, now standing at $96.19 per litre. Similarly, diesel prices have seen a reduction of 83 cents, bringing the cost to $98.40 per litre. This trend reflects a significant alleviation in the global oil market, which is expected to translate into lower prices domestically.
Despite the anticipation, there remains a degree of uncertainty as six trading days still remain before the final prices are set. The ultimate rates will depend on the fluctuations in the global market and exchange rates over this period.
The federal government currently imposes a petroleum levy (PL) of Rs60 per litre on both petrol and HSD, while the general sales tax (GST) rate is maintained at zero. This taxation structure is part of the government’s broader fiscal strategy, which aims to balance revenue generation with economic stability.
For the fiscal year, the government has projected to collect Rs936 billion from petroleum levies, surpassing the budgeted target of Rs869 billion. This projection underscores the critical role of petroleum levies in the national revenue framework, even as the government moves to adjust prices in response to international trends.
The anticipated reduction in petroleum prices is expected to provide much-needed relief to consumers and industries alike, potentially easing inflationary pressures and stimulating economic activity. Lower fuel costs can have a cascading effect on various sectors, including transportation and manufacturing, ultimately benefiting the broader economy.
As Pakistan awaits the final decision on May 31, 2024, the focus remains on monitoring global market trends and exchange rate fluctuations. The government’s proactive approach to adjusting petroleum prices in alignment with international movements demonstrates a commitment to maintaining economic stability and supporting consumer welfare in a volatile global market.
