Consumers might benefit from a Rs2.97 per litre reduction in petrol prices starting September 1, 2024, due to fluctuations in the global oil market.
Preliminary estimates suggest that high-speed diesel (HSD) prices could drop by Rs2.31 per litre, while kerosene oil and light diesel oil (LDO) could see reductions of Rs1.19 and Rs1.96 per litre, respectively.
Read more: Big Cut in Petrol and Diesel Prices Announced
If these reductions are implemented, petrol could decrease from Rs260.96 to Rs257.99 per litre, HSD from Rs266.07 to Rs263.76 per litre, kerosene oil to Rs170.38 per litre, and LDO to Rs155.06 per litre.
These estimates assume the current tax structure, which includes a Petroleum Levy that was raised from Rs60 to Rs70 per litre in the 2024-25 budget but remains at Rs60.
The government has maintained a zero sales tax on petroleum products, relying on the Petroleum Levy for revenue. This approach has excluded provinces from the revenue typically generated by sales tax on petroleum products.
Additionally, the Inland Freight Equalisation Margin (IFEM) has been recently increased, affecting fuel prices. For petrol, IFEM rose from Rs7.79 to Rs8.3 per litre, and for HSD, from Rs4.4 to Rs5 per litre.
HSD affects inflation-sensitive consumers and is used in transport and agriculture, while petrol is crucial in Punjab due to expensive imported CNG. Kerosene oil is used in remote areas and by the Pakistan Army, and LDO serves industries.
Despite the potential price cuts, officials warn that any benefits to consumers might be offset by tax adjustments.
