On Sunday, the interim government implemented significant price reductions, reducing the cost of petrol by Rs40 per liter and high-speed diesel (HSD) by Rs15 per liter for the next two weeks.
As per a notification issued by the Ministry of Finance, the revised prices are now Rs283.38 per liter for petrol and Rs303.18 per liter for HSD. The justification for this price adjustment is attributed to fluctuations in global petroleum product prices and an improved exchange rate.
This marks the second consecutive occasion in which the interim government has lowered fuel prices following three consecutive bi-weekly increases. In the previous adjustment, they had cut the price of petrol by Rs8 per liter and HSD by Rs11 per liter.
It had been projected earlier in the week that HSD and petrol prices would dip below the Rs300 per liter mark in the upcoming review due to a substantial decline in global oil rates and the appreciation of the rupee.
The interbank market witnessed a 93 paise drop in the value of the dollar on Thursday, closing at Rs278.58. However, this depreciation was not influenced by the disappointing remittances figure.
There is potential for the interim government to consider different actions, particularly regarding high-speed diesel, which currently carries a petroleum development levy of Rs50 per liter in contrast to Rs60 for petrol.
The government’s objective is to generate around Rs869 billion in levy on petroleum products in line with the current fiscal year’s budget target and commitments with the International Monetary Fund (IMF).
Since September 1, both petrol and diesel prices have remained above Rs300 per liter. Alongside costly electricity, fuel has been a significant contributor to high consumer prices, pushing inflation up to 31.4 percent in September. These reductions may potentially mitigate the upward trajectory of inflation in this context.