Govt reduces petroleum prices for Sept

ISLAMABAD: The government has slashed petrol price by Rs4.59 and diesel price by Rs5.33/litre for September 2019 effective from today (Sunday) till midnight of September 30. Besides, kerosene oil price has also been reduced 4.27/litre and Light Diesel Oil (LDO) by 5.63 a litre.

The reduction in petroleum prices would help in pushing down inflationary pressure in economy and its expectations, which may also lead to cutting the State Bank of Pakistan discount rate in coming months which is currently at 13.25pc, independent economics experts believe.

The decision has been taken owing to reducing oil prices in international market. The Brent oil price in international market on August 30 was recorded at $60.43/barrel which was $64/barrel on July 30. Earlier in April and June, it was hovering near $72/barrel.

With this decision, diesel prices have come down from earlier Rs132.47 to Rs127.14/litre; petrol to Rs113.24/litre from previous price of Rs117.83/litre. Besides, Light Diesel Oil (LDO) price came down to Rs91.89/litre from earlier price of Rs97.52/liter and Kerosene oil from Rs103.84 to Rs99.57/litre. The government has taken the same decision what the Ogra has recommended to it.

It is worth mentioning that since July 2019, Pakistan started receiving monthly oil supplies worth $275 million from Saudi Arabia on deferred payment. Under this arrangement, Pakistan would get this oil facility to the tune of $9.9 billion over next three years.

The Finance Ministry, while releasing this decision said that prices of petroleum products are determined by Ogra using actual orders placed by PSO for High Speed Diesel (HSD) and petrol for the last month/period. Predefined costs like freight, port handling and OMCs/retailers margins are then added by regulator. For the last three month, the GST has been fixed at 17 pc, when in fiscal year 2015/16 it had gone to as high as 71pc on HSD. PDL is also fixed.

So, any variation in purchase price of PSO over the last imported period is notified by Ogra. If the international prices show a downward trend, this occurs with 30 to 40 days, subject to exchange rate movement.

It is worth mentioning that the average purchase price of petrol (inclusive of custom duties) over the last imported period has been Rs71.89/litre and that of HSD has been Rs82.06/litre prior to taxes and cost of distribution. After adding taxes and distribution charges in cost of purchasing petrol and diesel, over last month, the ex-depot sales prices are fixed at Rs113.24/litre and Rs127.14/litre respectively.

The ministry of Finance said that these prices in term of rupee parity for petrol are significantly lower than regional markets like India (Rs168.25/litre), Sri Lanka (Rs144.15/litre), Bangladesh (Rs168.79/litre) etc.