Business

Pakistan fuel prices expected to decline for second consecutive fortnight

If the government decides to raise the petroleum development levy, the full impact of the reduction in international prices will not be passed on to consumers

Pakistan fuel prices expected to decline for second consecutive fortnight

A car gets refueled at a station in Pakistan

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The Pakistan government is expected to reduce fuel prices for the second consecutive fortnight, following a drop in international rates.

International diesel prices are projected to decline by 4.0%, averaging $89.8 per barrel, while petrol prices are expected to decrease by 6.2%, averaging $81.8 per barrel.

Consequently, the country's Oil and Gas Regulatory Authority (OGRA) is expected to reduce the prices of diesel and petrol by PKR 8.7 and PKR 9.7 per liter, respectively.

The authority uses the average price given by Platts — a global provider of energy and commodity benchmark prices — and the import premium to determine fuel prices every fortnight.

The next announcement will be made on August 15 and will be applicable from August 16-31.

This reduction is expected to occur at the ex-refinery level. However, the impact of lower international prices may not be fully passed on to customers if OGRA decides to raise the petroleum development levy (PDL) by PKR 5 per liter.

In this year's budget, the government had decided to increase the PDL from PKR 60 to PKR 70 per liter. However, the PDL has remained at PKR 60 per liter since the start of the current fiscal year.

If the government chooses to raise the PDL by PKR 5 per liter, the reduction in petrol and diesel prices would be limited to PKR 4.7 and PKR 3.7 per liter, respectively.

With the anticipated PKR 8.7 per liter drop, diesel prices will return to levels last seen on July 16, 2023, when they were PKR 253.5 per liter.

In FY24, the government collected PKR 960 billion through the PDL. Its target for FY25 is PKR 1,281 billion.

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