Anticipated reductions in petroleum prices in Pakistan for the third consecutive fortnight offer a welcome respite to consumers. The potential decrease of Rs5-18 per litre for diesel and petrol is primarily driven by favorable fluctuations in the exchange rate. High-Speed Diesel (HSD) might see a drop of around Rs5-6 per litre, possibly falling below the Rs300 per litre mark, unless the interim government decides to impose additional petroleum levies.
This presents an opportunity for the government to maximize revenue collection through a potential increase in the petroleum levy (PL) on HSD, which could go up to the permissible limit of Rs60 per litre from its current rate of Rs55. The government’s move to capitalize on these price reductions could help boost revenue at a time when collections have been exceeding targets.
For petrol, the PL has already reached the peak limit of Rs60 per litre. The government aims to collect approximately Rs869 billion through PL during the current fiscal year, as specified in the budget and in line with commitments to the International Monetary Fund (IMF). During the first quarter of the fiscal year, PL collection surpassed Rs222 billion.
These developments reflect the delicate balance between government revenue generation and providing economic relief to the public through controlled petroleum prices, with external factors such as exchange rates playing a significant role in determining these price fluctuations.
