Government Reduces Petrol and Diesel Prices by Up to Rs2.20

The government reduced the prices of petrol by Rs2.20 and high-speed diesel (HSD) by Rs1.50 per litre, according to a Petroleum Division notification. Petrol now retails at Rs327.62 per litre, while HSD costs Rs380.86 per litre. These rates apply from August 8 to August 10.

Despite the price cuts, the government maintains taxes and duties of Rs114 per litre on petrol and Rs100 per litre on HSD, according to the notification.

Fuel Price Trends and Market Peaks

The current pricing follows a period of significant volatility. High-speed diesel reached a peak of Rs520.35 on April 3. That upward trend began on February 28, when prices rose from Rs281 per litre following the outbreak of the US-Iran war.

Petrol followed a similar trajectory, peaking at Rs458.41 on April 3. Its increase began in the first week of March from a base price of Rs266 per litre.

Transition to Daily Pricing Model

Petroleum Minister Ali Pervaiz Malik announced that fuel prices will now be fixed on a daily basis. This shift is intended to address international market fluctuations caused by renewed hostilities between Iran and the US.

The cabinet and the prime minister assigned the Oil and Gas Regulatory Authority (Ogra) the responsibility of determining these daily prices based on international market trends, according to Minister Malik.

This replaces a weekly revision system the government had used since early March. During that period, the government also implemented fuel conservation measures and targeted relief subsidies in April to mitigate potential supply disruptions stemming from the Middle East conflict.

Industry Reaction and Economic Impact

The All Pakistan Dealers Association rejected the decision to move to daily pricing. The association stated it would consider a protest plan in response to the new policy.

Fuel price changes impact different economic sectors based on usage. Petrol is primarily used in two-wheelers, rickshaws, small vehicles, and private transport, meaning price shifts directly affect middle and lower-middle-class consumers.

Diesel price fluctuations impact the broader public through its use in power plants, large generators, and the heavy transport sector.

Petrol and HSD serve as primary revenue earners for the state. Monthly sales for these fuels range between 700,000 and 800,000 tonnes, which contrasts with the monthly demand for kerosene, which is approximately 10,000 tonnes.