Govt’s Actions Threaten Public’s Expectations Regarding Petrol Prices

Government Plans to Maintain Unchanged Petrol Prices Despite Indications for Reduction

According to a report in Business Recorder on Friday, the federal government is contemplating keeping petrol prices unchanged, despite estimates from Oil Marketing Companies (OMCs) indicating the potential for a reduction. OMC estimates suggest a possible decrease of up to Re1 per litre for petrol and kerosene oil, while the prices of high-speed diesel and light diesel oil might see an increase of Rs2 per litre.

These OMC estimates are based on zero adjustments in the exchange rate, current petroleum levy rates, and general sales tax rates. However, the government is considering sustaining current prices in the first half of January 2024, with only a marginal increase due to fluctuations in the global Brent price, which, as of late December, remains below the $80 mark.

The new petroleum prices, set to be announced on December 31, would be applicable in the first half of January, aligning with the government’s bi-weekly revision based on international oil rates.

As of now, the government charges Rs60 per litre in petroleum levy on petrol and high-speed diesel, with zero rates on GST.

Brent crude futures, a key benchmark, experienced slight fluctuations in the second half of December, remaining below $80. The announcement of these new prices would follow the caretaker government’s decision on December 15 to reduce the price of petrol by Rs14 per litre and high-speed diesel by Rs13.5. Currently, the price of petrol stands at Rs267.34 per litre, and high-speed diesel is priced at Rs276.21 per litre.