The federal government on Friday announced a fresh revision of fuel prices, reducing the price of petrol by Re0.66 per litre while raising the price of high-speed diesel (HSD) by Re0.52 per litre, according to Dawn. The new rates take effect on October 10 and will remain in force until October 12.
Following the revision, petrol will retail at Rs398.30 per litre, while HSD will cost Rs396.24 per litre, the report said, citing a notification issued by the Petroleum Division. The government continues to levy Rs114 per litre in taxes and duties on petrol and Rs100 per litre on diesel, Dawn reported.
The latest adjustment comes under the daily fuel pricing mechanism. The Express Tribune reported that the revision was issued for October 10 to October 12, and noted that the government had raised petrol prices by Rs2.31 and HSD by 78 paisas per litre just a day earlier, for October 9.
Daily pricing amid volatile markets
The government moved to a daily price-fixing regime in July. According to Dawn, Petroleum Minister Ali Pervaiz Malik had announced on July 17 that fuel prices would be fixed daily because of fluctuations in international markets following renewed hostilities between Iran and the United States.
Under the mechanism approved by the federal cabinet, the Oil and Gas Regulatory Authority (Ogra) decides fuel prices on a daily basis based on international market trends, the cabinet and the prime minister having given the regulator that responsibility. Geo News reported that prices notified on Fridays remain unchanged over the weekend, and that daily prices are computed from a seven-day average of international market prices.
Relief scheme and austerity measures
The government has paired the pricing changes with targeted relief. Dawn reported that on September 13, Prime Minister Shehbaz Sharif announced a relief scheme for users of motorcycles, rickshaws and vehicles of up to 800cc to cushion the impact of rising global oil prices, while back in April the government had already rolled out targeted measures to provide subsidised fuel.
At the same time, austerity and fuel conservation measures remain in place. Markets are required to close by 9pm and fuel allocations for official vehicles have been cut by 50 per cent for three months, according to Dawn.
Fuel prices surged earlier this year after the US-Iran war broke out on February 28. HSD had climbed from Rs281 per litre to a peak of Rs520.35 on April 3, while petrol rose from Rs266 in the first week of March to a peak of Rs458.41 on April 3. Prices have eased since then but remain far above pre-war levels.
Dawn noted that petrol is mainly used in private transport, small vehicles, rickshaws and two-wheelers, so its price movements directly affect the middle and lower-middle classes. Diesel price changes, meanwhile, ripple across the wider economy because diesel powers the heavy transport sector, power plants and large generators. Petrol and HSD are the major revenue earners for fuel retailers, with combined monthly sales of about 700,000 to 800,000 tonnes, compared with just 10,000 tonnes for kerosene.