Pakistani motorists received only a modest reduction in fuel prices after the federal government increased levies on petrol, offsetting most of the savings generated by lower international oil prices.

Till 10 July, the government reduced the prices of both petrol and high-speed diesel (HSD) by Rs. 1.97 per litre. However, revised tax and pricing components significantly limited the impact of the decline in global fuel prices.

According to calculations by Topline Securities based on OGRA’s pricing formula, the ex-refinery price of petrol dropped by Rs. 12.18 per litre during the review period. Most of this decline was absorbed by a Rs. 3.99 per litre increase in the Inland Freight Equalization Margin (IFEM) and a Rs. 6.22 per litre increase in the government’s overall levy burden, leaving consumers with a net reduction of only Rs. 1.97 per litre.

The total tax burden on petrol increased from Rs. 69.14 to Rs. 75.36 per litre. This included a Rs. 3.72 per litre increase in the Petroleum Levy, which rose from Rs. 66.64 to Rs. 70.36 per litre, and a Rs. 2.50 per litre increase in the Climate Support Levy, taking it from Rs. 2.50 to Rs. 5.00 per litre.

In contrast, the overall levy on high-speed diesel was reduced by Rs. 6.22 per litre. Although the Climate Support Levy on diesel was also increased by Rs. 2.50 per litre, the Petroleum Levy was lowered by Rs. 8.72 per litre, falling from Rs. 79.54 to Rs. 70.82 per litre. As a result, the total levy on diesel declined from Rs. 82.04 to Rs. 75.82 per litre.

Meanwhile, diesel’s ex-refinery price increased by Rs. 4.25 per litre during the same period. The reduction in the levy burden largely offset this increase, allowing the retail price of diesel to also decrease by Rs. 1.97 per litre.

Following the latest revision, petrol is now priced at Rs. 297.53 per litre, while high-speed diesel costs Rs. 309.50 per litre. The new prices came into effect on July 4.