Petroleum prices set to drop by up to Rs5/litre

ISLAMABAD: Fuel prices are estimated to decrease by more than Rs 5 per litre with the start of next month and will remain effective during the first fifteen days of June 2024.

According to reliable sources, petrol is expected to decrease by Rs 5.27 per litre, while high-speed diesel (HSD) could witness a reduction of Rs 4.13 per litre. 

Additionally, kerosene oil is projected to decrease by Rs 2.15 per litre, and light diesel oil (LDO) may see a substantial cut of Rs 5.08 per litre for the first half of June 2024.

As per sources, the estimated cuts in petroleum prices are subject to government approval and are contingent on various factors, including global oil prices, currency exchange rates, and financial implications for the energy sector.

The prices of petrol and HSD had declined in the international market by about $3.25 and $2.10 per barrel, respectively, in the last fortnight. This follows a previous fortnight’s drop of $8.7 and $4.3 per barrel for petrol and HSD, respectively.

These price reductions are also based on the current tax structure and, if approved, would mean consumers could be paying Rs 267.83 per litre for petrol, Rs 269.95 per litre for HSD, Rs 171.33 per litre for kerosene oil, and Rs 156.09 per litre for LDO. 

The proposed changes are calculated based on the present government taxes and are expected to alleviate the inflation burden on the general public.

The next two days are crucial for reaching a final decision. The OGRA will forward its work regarding future oil prices on May 31, after which the finance ministry will consult with the Prime Minister to make the final decision, said sources.

The sources also informed that these estimates were calculated with zero exchange rate adjustment for the first half of June 2024. The current Inland Freight Equalization Margin (IFEM) stands at Rs 6.73 on petrol and Rs 3.77 on HSD. 

The petrol premium is projected at $9.700 per barrel, based on two expected vessels from Pakistan State Oil (PSO), while the HSD premium remains unchanged at $6.50 per barrel.

Currently, petrol is available at Rs 273.10 per litre, HSD at Rs 274.08 per litre, kerosene oil at Rs 173.48 per litre, and LDO at Rs 161.17 per litre in the open market of the country.

Petrol is primarily used as fuel for cars, motorcycles, and other vehicles. High-speed diesel (HSD) is mainly used for heavy vehicles such as trucks and buses, as well as industrial machinery, generators, and some agricultural equipment. 

Kerosene oil serves as a critical resource for cooking and lighting in households without electricity access. Light diesel oil is utilized in industrial boilers, furnaces, and certain types of engines, particularly in sectors like textiles, cement, and power generation.

If approved, this reduction in fuel prices is expected to contribute to a decrease in the country’s inflation rate, which is already showing signs of decline. The significant cut in oil prices would provide much-needed relief to inflation-hit consumers, easing their financial burden, sources added.