Many factors affect the petroleum prices in any country or region. Some significant factors are the cost of crude oil (i.e. the natural source of all petroleum related products), the refining, the distribution and the costs, profit, and fuel tax adjustments. The same is true for Petrol Price in Pakistan as well, which are currently as under:
| PRODUCT NAME | RS./LITRE (LATEST) |
|---|---|
| PREMIER EURO 5 | Rs.249.8/Ltr |
| HI-CETANE DIESEL EURO 5 | Rs.262.8/Ltr |
| LDO | Rs.187/Ltr |
| SKO | Rs.189.83/Ltr |
The governments subsidize the fuel prices while considering the financial situation of the economy and the purchasing power parity of the people. Pakistan’s government also partakes in subsidizing fuel prices to provide relief to the common people. This policy is also adopted in the neighboring and regional countries due to political situations.
Petroleum Product Import
Pakistan buys crude oil from countries that produce it. Therefore, this transaction is distinguished by the shifting price of Brent crude oil on the global market and Pakistan’s exchange rate.
Government-Managed Cost
The petrol price in Pakistan comprises of numerous components, each of which reflects a fraction of the oil value chain as a whole. Each area of the business, from the exploration and production of crude oil through the refining and distribution of petroleum products, accounts for the cost of fuel. Governments in all nations, with the exception of those with abundant oil reserves, levy fuel taxes to produce income in order to satisfy budgetary objectives or to drive energy policy.
The foundation for pricing petroleum products varies throughout the globe. The government may regulate prices by providing subsidies, enforcing price ceilings, or allowing an unfettered, liberal market to determine prices. In Pakistan’s otherwise market-based economy, the government regulates the price of gasoline and fixes the end-user pricing through the Oil and Gas Regulatory Authority (OGRA).
Determinants of Petrol Price in Pakistan
Ex-Refinery Pricing
Ex-refinery pricing refers to the price at which local refineries sell their product to oil marketing corporations (OMCs). The refineries do not set this price. Rather, OGRA calculates it using the Import Parity Price tool. The price is determined by adding import incidentals and surcharges to the FOB price of 92 RON Arab Gulf gasoline. It is essentially the cost of imported gasoline at the port of entry and is virtually totally dependent on global oil prices. Then OGRA calculates and administers the In-Land Freight Equalization Margin (IFEM) to ensure uniform oil pricing in Pakistan. Hence, without IFEM, the price disparity between Karachi and Islamabad would be substantial. Without IFEM, the price disparity between Karachi and Islamabad would be substantial.
Oil Marketing Corporation (OMC) profit margin
The OMC margin established by OGRA shows the maximum profit oil distributors can make per litre of gasoline. Moreover, the OMC margin established by OGRA shows the maximum profit oil distributors can make per litre of gasoline.
Dealer Margin
This is the greatest margin per litre that a gas station owner can earn by selling petroleum products.
Petroleum Development Levy (PDL)
The federal government establishes PDL to increase revenue. The rate of tax is determined by the Petroleum Division of the Energy Ministry.
Sales Tax
Lastly, the GST is applied to the total of the previous petroleum price components.
The gasoline price breakdown offers a different picture. Governments are typically hesitant to increase oil prices out of concern for political repercussions to stabilize the petrol price in Pakistan.
Petrol Prices in India
The following petroleum prices in India are in INR for Ahmadabad City.
| PRODUCT NAME | RS./LITRE (LATEST) |
|---|---|
| V-Power Petrol | Rs. 118.84/Ltr |
| Unleaded Petrol | Rs.109.34/Ltr |
| V-Power Diesel | Rs.134.68/Ltr |
| Diesel | Rs.130.5/Ltr |