In a surprise move, the government on Friday slashed the price of petrol by Rs12.63 per litre – effective from October 1.
The “massive| decrease, which has been extended after a tacit nod from the International Monetary Fund (IMF), was announced by Finance Minister Ishaq Dar during his maiden press conference.
He said that the decision to reduce the prices of petroleum products has been taken after consultation with Prime Minister Shehbaz Sharif.
Following the changes in the prices, petrol will now be available for Rs224.80 per litre.
Meanwhile, there is also a decrease of Rs12.13 in the price of high-speed diesel, after which the new price will stand at Rs235.30 per litre. The price of light diesel oil will be Rs191.83 after a decrease of Rs10.19 per litre.
Moreover, the finance minister also announced a 31-day extension in the date to file tax returns.
Later, a statement issued by the Finance Division, mentioned that the government decided to decrease the prices of petroleum products in the wake of the reduction in the prices of crude in the international market and with a view to providing relief to the consumers.
Separately, the Oil & Gas Regulatory Authority has notified about a 4.9pc reduction in LPG price for October. The prices will remain in place till October 15.
At present, the general sales tax (GST) is zero on all the key petroleum products including petrol, HSD, kerosene and LDO, against the normal rate of 17pc.
To pass on the relief to the consumers, the government took a hit on revenue by reducing the petroleum development levy (PDL) on petrol by Rs5 per litre to Rs32.42. However, the same has been increased by Rs5 per litre on HSD to Rs12.58.
Currently, the government is charging Rs12.58 per litre PDL on HSD, Rs15 per litre on kerosene, Rs10 on LDO and Rs30 per litre on High Octane Blending Component. Moreover, the prices of petrol and HSD also include Rs22 per litre custom duty.
On Thursday, the finance minister held a virtual meeting with IMF Mission Chief Nathan Porter and took him into confidence over the price cut in view of the flood situation and an earlier assurance by the Fund’s managing director to allow relaxations during PM Shehbaz’s visit to the US.
Under the deal with the IMF, the government had to gradually increase the PDL on petroleum products to a maximum of Rs50 per litre to collect Rs855bn during the current fiscal year.
The previous PTI government had committed a monthly PDL increase of Rs5 on petrol and HSD until it reached Rs50 in January for petrol and April for diesel.
However, before the former prime minister’s ouster, he reduced the PDL to zero on March 1. As the international prices went up and the PTI government not only reduced the petroleum prices by Rs10 per litre but also froze them for the next four months.
After coming to power in April, the PML-N-led coalition government refrained from increasing the prices immediately. However, since May 15, the government has been increasing the prices in line with the IMF deal. As Pakistan battled with the flood catastrophe, the government requested the IMF managing director for a three-month freeze on the PDL and fuel costs on electricity.