After continuous hike in fuel prices, the federal government announced a 5 percent reduction in the price of all petroleum products for the next two weeks on Friday.
The development surfaced after tacit approval of the International Monetary Fund (IMF) and was announced at a news conference by Finance Minister Ishaq Dar after discussions with Prime Minister Shehbaz Sharif.
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“The petrol price has been reduced to Rs224.80 per litre from Rs237.43 after a reduction of Rs12.63. Likewise, high-speed diesel price is being reduced by Rs12.13. It will now be sold at Rs235.30, [down] from the existing Rs247.43,” according to Ishaq Dar.
The price of kerosene has been reduced by Rs10.19 per litre from Rs202.02 to Rs191.83. The rate of light diesel oil (LDO) has been cut by Rs10.78 per litre from Rs197.28 to Rs186.50.
Similarly, the Oil and Gas Regulatory Authority has announced a 4.9 percent decrease in LPG prices for October. Prices will stay in effect until October 15.
Currently, the general sales tax (GST) on all important petroleum products, including petrol, HSD, kerosene, and LDO, is zero, as opposed to the customary rate of 17 percent.
To provide relief to the consumers, the government reduced the petroleum development levy (PDL) on petrol by Rs5 per litre to Rs32.42.
On Thursday, the finance minister met virtually with IMF Mission Chief Nathan Porter and assured him of the price cut considering the flood situation and an earlier commitment by the Fund’s managing director to permit for relaxations during Prime Minister’s visit to the US.
As per deal with the global lender, the government agreed with the IMF to gradually raise the PDL on petroleum products to a maximum of Rs50 per litre in order to earn Rs855 billion during the current fiscal year.
The previous PTI government promised a Rs5 monthly PDL rise on fuel and HSD till it reached Rs50 in January for petrol and April for diesel. However, prior to his resignation, the former prime minister reduced the PDL to zero on March 1. As worldwide prices rose, the PTI government not only decreased the price of petroleum by Rs10 per litre, but also kept it constant for the next four months.
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After the coalition government took charge in April, the government has been raising the prices in order to meet the conditions imposed by the IMF.
While Pakistan was dealing with massive flooding, the government asked the IMF managing director for a three-month freeze on the PDL and fuel costs for electricity.