Pakistan's petrol price falls as customs-duty component drops

Pakistan's petrol price fell by PKR 3.19 per liter on October 28 as a reduction in the customs-duty component and the removal of an exchange rate adjustment offset higher import costs, according to the Oil and Gas Regulatory Authority (OGRA).

The customs-duty component declined by PKR 5.71 per liter to PKR 20.56 from PKR 26.27, while the ex-depot petrol price fell to PKR 376.06 from PKR 379.25.

High-speed diesel, meanwhile, increased by PKR 2.25 per liter to PKR 398.07 from PKR 395.82.

The revised prices were announced by the Petroleum Division on October 27 and took effect the following day.

Why did petrol become cheaper despite higher import costs?

Petrol became cheaper because the lower customs-duty component and the removal of a previous exchange rate adjustment more than offset an increase in its import cost.

OGRA's pricing calculations show that the cost of petrol at Karachi port increased by PKR 3.33 per liter to PKR 244.73 from PKR 241.40.

The seven-working-day average international petrol benchmark rose by USD 1.80 per barrel to USD 120.21, while the cost-and-freight component increased by PKR 3.12 per liter.

However, the customs-duty component fell by PKR 5.71 per liter, and the previous exchange rate adjustment of PKR 0.82 per liter was reduced to zero.

OGRA calculates the customs-duty component using PSO's imported cargoes over the previous seven working days. The reduction therefore reflects the pricing calculation rather than an announced change in the customs tariff.

Why did diesel become more expensive?

Diesel's ex-depot price rose by PKR 2.25 per liter as its import cost increased.

OGRA's calculations show that the seven-working-day average Dubai crude benchmark increased by USD 1.30 per barrel to USD 113.13.

The diesel cost-and-freight component rose by PKR 2.25 per liter to PKR 274.64, while its customs-duty component remained unchanged at PKR 15.68 per liter.

Other pricing components, including incidentals, margins and levies, also remained unchanged.

How much tax and levy is included in fuel prices?

Both petrol and high-speed diesel carry a petroleum levy of PKR 80 per liter and a climate support levy of PKR 5 per liter, according to OGRA's pricing sheets.

Sales tax is zero for both products.

The ex-depot prices exclude secondary freight charges for transporting fuel from oil marketing companies' depots to individual filling stations.

What does the latest fuel price adjustment mean for consumers?

The petrol price reduction offers some relief to motorists, although higher diesel prices could increase transportation and freight costs for businesses.

The latest revision also illustrates how changes in international benchmarks, cargo-related costs and other pricing components can produce different outcomes for petrol and diesel.