Amidst the ongoing conflict between Iran and the US, the blockade on the Strait of Hormuz and rising tensions in West Asia – while the prices of petrol and diesel are rising in many parts of the world including India – the prices of these fuels are continuously falling in India’s neighboring country Pakistan.
**Government’s ‘Eid gift’**
On 29 May, the Shehbaz Sharif-led government in Pakistan announced a steep cut in the prices of petrol and high-speed diesel (HSD). In a relief to the citizens of the country on the occasion of Eid-ul-Azha, the government further cut the prices of petrol and diesel compared to the previous rates, calling the move an “Eid gift”. Yesterday, the prices of both petrol and high-speed diesel were cut by Rs 22 in Pakistan.
**Price cut for the third consecutive time**
Initially, prices of petrol and high-speed diesel were cut by Rs 5 per liter on May 15.
Then, on May 22 – as part of the weekly review – petrol prices were cut by Rs 6 per liter and high-speed diesel by Rs 6.80 per litre.
On May 29, the day of Eid, the third – and biggest – cut took place, with the government reducing the prices of both the fuels by Rs 22.
Overall, petrol became cheaper by Rs 33 per liter in Pakistan in the month of May, while diesel prices fell by a total of Rs 33.80.
**Why were the prices cut?**
The people of Pakistan were struggling with heavy inflation. In March and April, fuel prices in the country crossed the Rs 414 per liter mark for the first time. As a result, everything from freight to general public transportation became prohibitively expensive. People took to the streets and protests started at many places. To save its administration and ensure domestic political stability, the government decided to cut prices. In the same context, on the occasion of Eid, the government directed officials to provide direct relief to the public by deducting a part of the profits or taxes imposed on oil companies. There is another reason behind this reduction in prices: Pakistan is currently working under the guidelines and conditions set by the International Monetary Fund (IMF). The IMF had set a condition under which a fixed levy (tax) was required to be collected on every liter of oil. Now, as the government is on track to meet its tax collection target for the current financial year, it is passing on the benefits of the fall in crude oil prices in the international market to consumers instead of retaining it in the form of tax.