Overview:
Pakistani Government is set to announce the new Petroleum prices for the fortnight starting from April 01, 2023. While people are expecting a good relief in fuel prices due to the decline in global oil prices. However, the Prime Minister of Pakistan has already proven a plan to reduce the prices of fuel for lower-income groups and provide petrol to motorcyclists, three-wheelers, and small car owners at a lower rate.
Pakistani Government Plan to reduce oil prices:
To materialize the plan for reduced oil prices for certain segments of society, the Pakistani Government simply needs to create resources besides satisfying the (IMF) for creating space for relief. Our government is currently negotiating a bailout package with International Monetary Fund. This includes imposing a sales tax on petroleum products.
Moreover, the previous night, the petroleum prices in Pakistan increased due to an increase in Platt’s Singapore prices and the depreciation of the Pakistani Rupee. The Price of High-Speed Diesel was increased by Rs. 13 per liter while the price of MS (Petrol) was increased by Rs. 5.
Corresponding to this, the costs of light diesel oil remained unchanged while the cost of kerosene oil climbed by 2.56 rupees.
Oil Prices are getting significant price globally:
In the Globe, oil prices are significantly facing a decline over the past year. Brent crude oil drops around 36 % from 117 Dollars per barrel to 75 Dollars per barrel. This results in lower demand and an easing of economic growth. As a net importer of petroleum products, Pakistan expects to get profit from this decline in fuel prices while people are hoping for significant relief.
It becomes important for the Government of Pakistan to maintain a certain level of revenue and manage its expenditures to meet its loan obligations. So, our government has an opportunity to pass on the saving from falling global oil prices.
Relief for the Lower segment:
The announcement of the relief in Petroleum especially for the lower segment is a good step in the right direction. However, the government needs to find some resources in order to implement this program while meeting the requirements of the International Monetary Fund.
The Government of Pakistan is facing challenges in managing the import bill for petroleum products, due to the depreciation of the Pakistani Rupee (PKR) in the global market against the Dollar ($). Although! There are some positive developments in form of a decline in fuel prices globally. This may be a good opportunity for the Pakistani government to give relief to the masses.
Our Government has already proved a policy to provide petrol at a lower rate to lower income groups. Government Provides a subsidy of Rs. 50 per liter that has been announced for consumers who have motorbikes, smaller cars, and rickshaws.
Pakistani Government Negotiating for Bailout Package:
Moreover, the negotiation for the bailout package with International Monetary Fund (IMF) is ongoing with the government presenting a mini-budget to generate more revenue. This will include the imposition of the Sales Tax on Petroleum Products. We hope to finalize a staff-level agreement with the International Monetary Fund for the release of a tranche of 1.2 billion Dollars.
The Effective new Prices of fuel In Pakistan from March 16, 2023, are as follows:
| Product | Existing Prices March 01, 2023 | New Prices March 16, 2023 | Increase in Prices |
| Light Diesel Oil | 184.68 | 184.68 | Nil |
| HSD | 280.00 | 293.00 | +13 |
| MS (Petrol) | 267.00 | 272.00 | +5 |
| Kerosene | 187.73 | 190.29 | +2.56 |
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