Petrol Price Cut Pakistan – Diesel Hike
Fuel Prices See Significant drop as OGRA Slashes LPG Costs
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Islamabad: Consumers are set to benefit from a notable reduction in fuel costs as the Oil and gas Regulatory Authority (OGRA) has announced a substantial cut in Liquefied Petroleum Gas (LPG) prices. This development comes amidst ongoing discussions about petroleum levies and their impact on the common man.
Petroleum Levies and consumer Impact
The pricing of petroleum products in Pakistan is a complex equation, influenced by a multitude of government levies and industry-specific charges. A significant portion of the retail price is attributed to the petroleum levy, which forms a substantial revenue stream for the government. In the fiscal year 2024-25, the government collected an remarkable Rs1.161 trillion through this levy, with projections indicating a further 27% increase to Rs1.470 trillion in the current fiscal year.
Beyond the petroleum levy, a Climate Support Levy (CSL) also contributes to the final price, with Rs2.25 per litre specifically allocated to this environmental initiative. Moreover,customs duties add another layer of cost,with Rs20-21 per litre levied on both imported and locally refined fuels. The intricate network of distribution and dealer margins accounts for an additional Rs17 per litre, reflecting the operational costs within the supply chain.
petrol and High-Speed Diesel (HSD) remain the primary revenue generators for the government within the petroleum sector. Their combined monthly sales hover around 700,000-800,000 tonnes. In stark contrast, the demand for kerosene is considerably lower, standing at approximately 10,000 tonnes per month.
OGRA Slashes LPG Price by Rs17.7 per kg
In a welcome move for consumers, OGRA has announced a significant reduction in the price of LPG, slashing it by Rs17.7 per kilogramme. This latest adjustment follows a previous decrease last month, were the price of LPG was reduced by Rs7.51 per kg, or 3.1%, for July. The price for an 11.8kg cylinder in July was set at Rs2,750.6, down from Rs2,838.31 in June. OGRA has consistently linked the LPG producer price to the Saudi Aramco-CP and the prevailing US dollar exchange rate, ensuring a degree of transparency in its pricing mechanism.
The new consumer price for an 11.8kg LPG cylinder has been set at Rs2,541.36 for August, a notable decrease from Rs2,750.6 in the previous month.This brings the maximum consumer price for LPG per kilogramme to Rs215.37. These revised prices are effective from August 1st.
OGRA has emphasized that these regulated prices will apply as the maximum consumer price across all levels of the supply chain, encompassing both indigenous and imported LPG. The new producer price for an 11.8kg cylinder has been fixed at Rs2,054.02.
This marks the third consecutive month of declining LPG prices. Consumers have seen the cost of an 11.8kg cylinder fall from Rs2,892.91 in May, to Rs2,838.31 in June, and now to Rs2,750.6 in July, with the August price further reducing the burden.
Concerns Over LPG Bowser Safety
Despite the positive news on price reductions, a recent parliamentary panel meeting highlighted significant concerns regarding the regulatory environment within the petroleum sector, especially concerning the safety of LPG transportation. It was disclosed that a substantial portion of the estimated 2,000 bowsers involved in handling LPG are not registered, posing potential risks to public safety.
Out of the total fleet, only 800 bowsers are registered with the Department of Explosives, and a mere 247 hold licenses issued by OGRA. This alarming oversight has been identified as a critical lapse, underscoring the need for stricter enforcement and improved regulatory oversight to ensure the safe handling and transportation of LPG.