Petrol price cut by Rs2.07 per litre, diesel Rs3.4

ISLAMABAD: The federal government has slashed the price of petrol by Rs2.07 per litre for the next fortnight, bringing the price down from Rs249.10 to Rs247.03 per litre.

The new prices will be effective from October 1, according to an official notification issued on Monday. As per the official statement, the price of high speed diesel (HSD) came down to Rs246.29 from Rs249.69 after a reduction of Rs3.40.

Meanwhile, the price of Kerosene oil has also been reduced to 3.57 rupees per liter and light diesel by 1.03 per liter. In five consecutive reductions, petrol price has been slashed by a total of Rs28.57/litre and diesel by Rs37.34.

On September 15, the federal government notified a cut of Rs10 per litre in the petrol price as well as a Rs13.06 per litre reduction in the price of HSD.

Petrol, also called mogas, is mainly used in private transportation, small vehicles, rickshaws, and two-wheelers. Higher fuel prices significantly impact the budgets of the members of the middle and lower-middle classes, who primarily consume petrol for commuting. On the other hand, a significant portion of the transport sector relies on high-speed diesel.

Its price is considered inflationary since it is predominantly used in heavy goods transport vehicles, trucks, buses, trains, and agricultural machinery such as tractors, tube wells, and threshers.

The consumption of high-speed diesel particularly contributes to the increased prices of vegetables and other food items.

Meanwhile, the federal government has increased liquefied petroleum gas (LPG) prices by Rs7.3 per kilogram, or 2.99 percent for both domestic and commercial consumers for October 2024, citing rising global costs.

The revised pricing structure came into effect today (October 1, 2024). Following this adjustment, the 11.8-kilogram domestic gas cylinder will now cost Rs2,965, while the commercial cylinder (45.4kg) will be priced at Rs11,300. In comparison, last month’s domestic cylinder price was Rs2,879, and the commercial cylinder was Rs10,968. This increase will put a strain on household budgets across the country.

Ogra is responsible for regulating LPG prices and announces the prices each month. However, enforcement of these prices has been lacking, leading to LPG being sold at exorbitant rates, even in the capital city of Islamabad.

As per notification from the OGRA, the cost per kilogram of LPG after the increase will be Rs251.3. Notably, last month too, the government increased LPG prices by Rs7.0 per kilogram for September 2024.

OGRA said: “The LPG producer price is linked with Saudi Aramco-CP and US dollar exchange rate. As compared to the previous month Saudi Aramco-CP has increased by 3.84 percent. The average dollar exchange rate has slightly decreased by 0.125 percent resulting to increase in LPG consumer price by Rs86.28/11.8 kg cylinder (2.99%). The per Kg increase in LPG consumer price is Rs7.31.”

The regulator calculated the producer price of LPG, assuming a composition of 40 percent propane and 60 percent butane, to be Rs173,300 per tonne. This includes an excise duty of Rs85 per tonne but excludes the petroleum levy of Rs4,669 per tonne. The total cost for an 11.8-kilogram cylinder is Rs2,045. Without an 18 percent general sales tax (GST), the producer price would have been Rs177,969 per tonne, leading to a cylinder price of Rs2,100. The GST on this amount would be Rs32,9034 per tonne or Rs378 per 11.8-kilogram cylinder.

OGRA also determined the maximum producer price at Rs210,004 per tonne (including GST), or Rs2,478 per 11.8-kilogram cylinder. Marketing, distribution, and transportation margins have been set at Rs35,000 per tonne, with a marketing margin of Rs17,000, a distribution margin of Rs10,000, and a transportation margin of Rs8,000, resulting in a total margin of Rs413 per cylinder. Consumers will also face an 18 percent GST of Rs6,300 per tonne or Rs74.34 per 11.8-kilogram cylinder on these margins. The maximum LPG consumer price will be Rs251,304 per tonne or Rs2,965 per 11.8-kilogram cylinder. The maximum LPG price will be Rs251.3 per kilogram.