As of August 1, 2024, significant changes in fuel prices are expected in Pakistan, bringing some relief to consumers. The government is set to reduce the prices of petrol, high-speed diesel (HSD), kerosene oil, and light diesel oil (LDO), reflecting recent shifts in global oil markets and domestic economic conditions. Here’s a detailed overview of the anticipated changes and the factors driving them.
According to government and industrial sources, petrol prices are likely to decrease by Rs5.50 per litre, with the new rate expected to be Rs270.10, down from Rs275.60. This reduction follows a period of substantial price increases, providing much-needed relief for consumers.
High-speed diesel, a critical fuel for transportation and industry, is projected to see a more significant drop. The price may fall by Rs11.06 per litre, potentially setting the new rate at Rs272.57 compared to the current Rs283.63. This substantial decrease aims to alleviate the financial burden on sectors heavily reliant on diesel.
Kerosene oil, often used in rural areas and for heating, is expected to decrease by Rs5.84 per litre. The new price could be set at Rs177.87, down from Rs183.71. Similarly, light diesel oil (LDO) may see a reduction of Rs5.07 per litre, adjusting the price to Rs161.18 from Rs166.25.
If the government decides to increase the petroleum levy by Rs5 per litre on both petrol and diesel, the anticipated relief might be diminished. In such a scenario, the reduction in petrol prices could be reduced to Rs0.50 per litre, and the decrease in diesel prices could be limited to Rs6.06 per litre. This potential levy increase could offset some of the benefits of the projected price reductions.
In recent weeks, fuel prices have experienced notable increases. For the last two fortnights, from July 1 to July 31, 2024, petrol prices surged by Rs17.44 per litre, and diesel prices rose by Rs15.74 per litre. These increases were a response to rising global oil prices and adjustments in domestic economic policies.
The internal freight margin for petrol is currently Rs7.79 per litre, while for high-speed diesel, it stands at Rs4.51 per litre. Additionally, the premium on petrol is $8.48 per barrel, and on high-speed diesel, it is $5 per barrel. These internal and external costs are integral to the pricing structure and can influence future price adjustments.
The anticipated reductions in fuel prices are expected to provide significant relief to consumers, particularly in sectors heavily reliant on diesel and kerosene oil. Lower fuel prices can lead to reduced transportation and production costs, which may positively impact overall economic conditions.
However, the potential increase in the petroleum levy could moderate the benefits of the price reductions. It is crucial for consumers and businesses to stay informed about these changes and prepare for any adjustments that may arise from government policy shifts.
The expected reduction in fuel prices starting August 1, 2024, represents a noteworthy development in Pakistan’s economic landscape. While the projected decreases in petrol, diesel, kerosene oil, and light diesel oil offer a welcome relief, potential changes in government levies could influence the final impact. As global and domestic factors continue to shape fuel prices, ongoing monitoring and adjustment will be essential for understanding and managing the effects on consumers and the economy.
