In this recent fortnightly analysis, the notable reduction in the costs of petroleum products has brought about a noteworthy impact on the economic landscape.
The price adjustments, featuring a Rs14 per liter decrease for petrol and a Rs13.50 per liter decline for high-speed diesel (HSD), amounting to a 4.6 percent reduction, have been implemented with effect from December 16.
Despite this adjustment, the regulatory stance on the petroleum levy (PL) remains unchanged, maintaining a steadfast maximum limit of Rs60 per liter for both petrol and HSD. Notably, there is a notable absence of Goods and Services Tax (GST) on these crucial products.
The interim government’s proactive measures include adjustments in both the inland freight equalization margin (IFEM) and the margins allocated to dealers.
Post-adjustment, consumers can now acquire petrol at the revised rate of Rs267.34 per liter, while HSD is available at Rs276.21 per liter, reflecting the nuanced dynamics of the fuel market.
Beyond petrol and HSD, the price of kerosene oil, which holds significance in both the defense sector and remote areas for cooking purposes, has seen a commendable reduction of Rs10.14 per liter. This brings the new price to a more affordable Rs191.20 per liter.
Similarly, the price of Light Diesel Oil (LDO) has experienced a noteworthy reduction of Rs11.29 per liter, currently standing at Rs164.64 per liter.
On the global front, the downward trajectory of both petrol and HSD prices is evident, recording a collective decline of 5.5 percent over the past fortnight. Simultaneously, the Pakistani rupee has displayed resilience, gaining marginally against the US dollar, further contributing to the positive economic narrative.
The decline in HSD prices by an average of per barrel, from .50 to .50, is juxtaposed with the descent of petrol prices from .5 to .7 during the same fortnight (December 1-15). Moreover, the Pakistani rupee has demonstrated its strengthening trend against the US dollar, marking a shift from Rs285.5 to Rs284 on December 1.
Amidst these economic fluctuations, it’s worth noting that Attock Refinery Limited (ARL) faced operational challenges in December.
The refinery temporarily shut down two crude distillation plants due to a reduced off-take of finished products by oil marketing companies (OMCs). ARL, primarily refining indigenous crude oil, communicated in a letter dated December 07, 2023, that the company encountered substantial hurdles in disposing of its petrol and diesel production.
The root cause was attributed to poor upliftment by OMCs, who appeared to favor selling imported products, thereby maximizing their profits from IFEM charges. This dynamic underscores the intricate interplay between global market dynamics and local operational challenges within the petroleum industry.