The caretaker government is considering reducing petrol and high-speed diesel (HSD) prices by up to Rs20 and Rs38 per litre, respectively, in the coming review. This would be the most substantial single drop in fuel prices in Pakistan's history.
The price reduction is possible due to a significant drop in global oil rates and the rupee's appreciation. However, the government may decide to keep HSD prices unchanged or even increase them slightly in order to meet its budget target.
If the price reduction goes through, it will be the second time in a row that the caretaker government has reduced petroleum prices after three fortnightly increases.
Petrol and diesel prices have stayed above Rs300 per litre since Sept 1, contributing to high inflation. A reduction in fuel prices could help to halt the rising inflationary trend.
The government is also considering increasing the petroleum development levy on HSD by Rs5 per litre. This would reduce the price reduction to around Rs14-15 per litre.
The transport sector runs on HSD, so a reduction in its price would have a positive impact on the economy.
