By Staff Reporter
ISLAMABAD: Pakistan cut the price of petrol by 2.93 rupees a liter and raised diesel by 61 paisas for Tuesday, the latest swing in a daily pricing system that has tracked a Middle East war now in its eighth month.
Petrol will retail at 395.37 rupees a liter and high-speed diesel, or HSD, at 396.85 rupees, according to a Petroleum Division notification. Diesel remains the costlier fuel by 1.48 rupees. The government continues to levy 114 rupees a liter in taxes and duties on petrol, or about 29% of the pump price, and 100 rupees on diesel, about 25%.
The move extends a pattern from the previous revision. For October 10-12, the government lowered petrol by 0.66 rupee to 398.30 and raised HSD by 0.52 rupee to 396.24. Petrol is now 3.59 rupees below the 398.96 rupees it reached on Oct. 9, when it came within reach of the 400-rupee mark.
Both fuels are well off their highs, though far above levels before the US-Iran war began on Feb. 28. Petrol peaked at 458.41 rupees on April 3, and HSD reached 520.35 rupees the same day. Today’s petrol price is about 14% below that peak and diesel about 24% below. Petrol had begun its climb from about 266 rupees in the first week of March, and stood at 266.17 rupees on March 1. At 395.37 rupees it is more than 48% higher. Diesel started from about 281 rupees and is up about 41%.
On July 17, the government announced that fuel prices would be fixed daily, citing swings in international markets after renewed hostilities between Iran and the US. The cabinet and Prime Minister Shehbaz Sharif had given the Oil and Gas Regulatory Authority responsibility for setting prices each day based on global trends. The system replaced weekly revisions the government had announced since early March, alongside fuel conservation measures taken over fears of supply disruption. In April, it also introduced targeted relief to provide subsidised fuel.
Since daily pricing began on July 21, the petrol price had been raised 35 times and cut 22 times. Diesel had risen 34 times and fallen 23 times.
Oil Market
Global crude prices offer little relief. Brent futures rose $2.04, or 2%, to $106.76 a barrel in New York on Monday, their highest since Sept. 29. West Texas Intermediate gained $1.84, also 2%, to $93.69. Attacks on Saudi Arabia overshadowed the prospect of more supply after US President Donald Trump hailed fresh Russian diesel exports and a Russia-Ukraine ceasefire on energy targets.
Any sense of normal exports through the Strait of Hormuz “was shattered last week,” said Bjarne Schieldrop, a commodities analyst at SEB, who added that fresh Houthi attacks on Saudi Arabia helped lift prices.
Pakistan imports most of its petroleum needs, so shifts in crude and freight costs feed quickly into pump prices. Prices are shaped by OPEC+ decisions, Middle East conflicts, sanctions on producers and disruptions on routes including the Strait of Hormuz and the Red Sea.
On Sept. 13, Sharif announced a relief scheme offering 100 rupees a liter off petrol for motorcycles, three-wheeler rickshaws and cars with engines up to 800cc, aimed at shielding lower-income consumers. An estimated 11.8 million people would qualify. About 10 million two-wheeler users and 800,000 three-wheeler users would get relief on 20 liters a month, a maximum of 2,000 rupees each. A further 1 million owners of cars up to 800cc would get relief on 30 liters, worth up to 3,000 rupees.
The government said the subsidy could be extended for up to 10 months. It was costing 35 billion to 40 billion rupees a month, with more than 6 million registrations.
On Sept. 17, the Cabinet Division reintroduced austerity and conservation measures with immediate effect. Shops, markets, malls, bazaars, department stores, grocery stores and kiryana shops must close by 9 p.m. daily. Marriage halls, marquees and other venues hosting festive events must close by 10 p.m. Restaurants, cafes, food outlets and standalone fruit and vegetable shops can stay open until 11 p.m. Takeaway and home delivery are exempt. Fuel allocations for official vehicles have been cut by 50% for three months, and public events are restricted.
The subsidy’s future is in question. Pakistan reached a staff-level agreement with the International Monetary Fund after talks from Sept. 23 to Oct. 7, opening the way for about $1.2 billion in financing, subject to the Executive Board’s approval. The fund urged Islamabad to limit petroleum subsidies to those who need them and to phase out costly support schemes, saying aid during oil price spikes should be targeted and temporary. The IMF estimated Pakistan’s inflation at about 10.3% in September.
Petroleum levy collections have already exceeded expectations. Pakistan collected 1.567 trillion rupees in the year through June against a target of 1.468 trillion, ARY News reported on Sept. 28, citing people it didn’t name.
Petrol is used mainly in private transport, small vehicles, rickshaws and two-wheelers, so its price hits middle and lower-middle income households. Diesel affects the public more broadly because it fuels heavy transport, power plants and large generators. Together, petrol and HSD are the main revenue earners among petroleum products, with monthly sales of about 700,000 to 800,000 tonnes, compared with about 10,000 tonnes of monthly demand for kerosene.
Copyright © 2021 Independent Pakistan | All rights reserved
