Overview of Price Revisions
On January 1, 2025, the federal government of Pakistan announced a revised pricing structure for petroleum products. The changes are applicable for the next fortnight and reflect adjustments based on fluctuations in the international market. The Oil and Gas Regulatory Authority (OGRA) calculated the new consumer prices, which have been notified by the Ministry of Finance.
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Petrol and Diesel Price Updates
Petrol Price:
- Increased by Rs. 0.56 per liter.
- New price: Rs. 252.66/liter, up from Rs. 252.10/liter.
High-Speed Diesel (HSD):
- Increased by Rs. 2.96 per liter.
- New price: Rs. 258.34/liter, up from Rs. 255.38/liter.
High-speed diesel is widely used in transportation and agriculture sectors, and this hike could contribute to inflationary pressures. Petrol, commonly used in motorbikes, cars, and as an alternative to compressed natural gas (CNG), has seen increased demand, particularly in Punjab due to CNG restrictions.
Kerosene and LPG Price Adjustments
Kerosene Oil:
- Price increased marginally from Rs. 249.61 to Rs. 250.16/liter.
Liquefied Petroleum Gas (LPG):
- Domestic LPG cylinder price reduced by Rs. 47.43 or 1.58%, lowering it to Rs. 2,953.36 from Rs. 3,000.79.
- This reduction is linked to a 2% decrease in the Saudi Aramco Contract Price (CP) and minimal changes in the dollar exchange rate.
Factors Influencing the Revisions
The new pricing structure reflects fluctuations in global crude oil prices and the Inland Freight Equalization Margin (IFEM). The IFEM for petrol increased from Rs. 5 to Rs. 7.55 per liter, while it decreased for HSD from Rs. 4.18 to Rs. 2.78 per liter.
Additionally, the petroleum levy of Rs. 60 per liter on petrol and diesel remains unchanged, contributing to federal revenue. Predictions about an 18% General Sales Tax (GST) and an increase in the Petroleum Development Levy (PDL) to Rs. 70 per liter have not yet been implemented.
Economic Implications
The revisions are expected to influence inflation rates, impacting the prices of daily commodities. While the increase in diesel prices is likely to affect transportation and agriculture, the marginal petrol price hike offers some relief to consumers.
