Govt reduces Diesel and Kerosene Rates, Petrol Unchanged

Islamabad: The government has announced revisions to fuel prices, keeping petrol rates steady while reducing prices for other petroleum products.

The price of high-speed diesel has been decreased by Rs3.05 per litre, light diesel by Rs2.78 per litre, and kerosene by Rs3.32 per litre. These new rates will take effect starting midnight tonight (Sunday) and will remain in place for the next 15 days.

In addition to the price adjustments, the government is moving forward with a $5-6 billion plan to modernize local oil refineries. During a recent meeting of the Special Investment Facilitation Council (SIFC), chaired by Planning Minister Ahsan Iqbal, the Petroleum Division was instructed to finalize a proposal within a week to initiate the upgrade projects.

To fund these upgrades, the government has temporarily increased the inland freight equalisation margin (IFEM) by Rs2.5 per litre on petrol, diesel, kerosene, and light diesel oil. The collected funds will be deposited into special ESCROW accounts designated for refinery upgrades under a government incentive program.

The Oil and Gas Regulatory Authority (Ogra) has been tasked with assessing the financial impact of this increase. A detailed report will be submitted to the Economic Coordination Committee (ECC) for approval.

However, not all stakeholders are satisfied with the temporary nature of the measures. Parco, which holds nearly half of the market share, has expressed concerns, calling for a long-term solution to ongoing sales tax issues.

The current sales tax exemption on petroleum products, introduced in the 2024-25 budget, has created hurdles for refineries in finalizing agreements with Ogra, which are crucial for initiating the upgrade projects.