Owing to sharp decline in crude oil prices in the international market, the Oil and Gas Regulatory Authority (Ogra) has recommended to the government to reduce petroleum products’ prices by up to Rs44 per litre for May, 2020.
In a summary sent to the Petroleum Division, the authority has proposed a decrease of Rs33.94 to Rs73.31 for the price of high-speed diesel (HSD), a drop of 31.6 per cent from the existing Rs107.25.
The government on Thursday made a massive cut of Rs27.15 per litre in the price of high speed diesel (HSD) for the month of May 2020, following a dip in the global oil prices due to the coronavirus-induced lockdowns. also the price of petrol reduced by Rs15 per litre against the proposed reduction of Rs20.68 per litre or 21.4%. Petrol would now be sold for Rs81.58 per litre as compared to Rs96.58.
The proposed reduction in fuel prices comes as oil prices slumped again amid concern about dwindling crude storage capacity worldwide and fears that fuel demand may only recover slowly once countries ease curbs imposed on economic and social activity to combat the coronavirus pandemic.
It is worth mentioning that the government is also charging 17 percent general sales tax (GST) on all petroleum products. Apart from it, the government is also collecting petroleum levy (PL) on these products, which is directly taken from consumers.
Oil prices have fallen to historic lows this month, with the US benchmark West Texas Intermediate crashing deep below zero for the first time as governments worldwide shut down businesses and air travel grinds to a halt due to the virus.
An agreement by top crude-producing nations to cut output by 10 million barrels a day from May 1 has done little to calm the market. During the previous PML (N) government, the petroleum levy was in the range of Rs3 to Rs10 per litre.
The POL prices also include the Standard General Sales Tax(GST) rate of 17 percent. After reduction the price of high-speed diesel will come down to Rs 80.10 per litre from the existing price of Rs 107.25 per litre. With the reduction of Rs 15 per litre the petrol price has come down to Rs 81.58 per litre form the current Rs 96.58. With the reduction of Rs 30.01 per litre the price of kerosene oil has come down from the current Rs77.45 to Rs47.44 per litre.
In August 2018, the Brent oil price was $75.5 per barrel and in Pakistan HSD was Rs112.94 per litre, petrol Rs 95.24 per litre, Kerosene Rs 83.96 and Light Diesel Oil (LDO) Rs75.37 per litre.
The international Brent oil has lost almost 75 percent value and is currently hovering in the range of $22 to $16 per barrel.
However, in Pakistan the public was kept deprived from the fruits of lowering international crude oil price and they were provided only partial relief. On March 24 the federal government had reduced the prices of all petroleum products by Rs 15 per litre and also kept the prices of POL products unchanged for the month of April.