The federal government on Wednesday announced a sharp reduction in the price of high-speed diesel, cutting the rate by Rs32.63 per litre, while simultaneously raising the price of petrol by Rs2.97 per litre, in one of the more dramatic single-day fuel price revisions the country has seen since shifting to a daily pricing mechanism. According to a notification issued by the Petroleum Division, the new prices take effect from Thursday, August 20, with petrol now retailing at Rs337.51 per litre, up from Rs334.54, while high-speed diesel drops to Rs363.06 per litre from its previous rate of Rs395.69.

The diesel cut came after Petroleum Minister Ali Pervaiz Malik held a press conference alongside Information Minister Attaullah Tarar in Islamabad, where he confirmed that oil refineries had agreed to a significant reduction following several rounds of negotiation held on the direct instructions of Prime Minister Shehbaz Sharif. Malik said the refineries had accepted the government’s request after officials laid out the difficulties facing consumers, and that the resulting cut of more than Rs30 to Rs32 per litre would be announced by the Oil and Gas Regulatory Authority once its calculations were finalised. Tarar, addressing the same press conference, said the prime minister had chaired a meeting earlier in the day attended by the petroleum minister and petroleum secretary, at which he specifically directed officials to negotiate with refineries and extend whatever relief possible to the public.

Malik described the decision as a gift from the prime minister to the people of Pakistan, noting that diesel is used heavily by farmers, goods transporters and public transport operators, groups he said stood to benefit most directly from the reduction. He said the negotiations had succeeded in part because a substantial share of the diesel consumed domestically is refined locally, giving the government more room to negotiate with refiners than it typically has on petrol, which relies more heavily on imported supply. The minister added that he intended to personally visit refineries in Karachi to acknowledge their cooperation, and said further relief measures could be expected in the coming days as the government continued working to ease the burden of fuel costs on the public.

The increase in petrol prices, by contrast, was framed by officials as a more modest and largely unavoidable adjustment tied to international market movements rather than any change in domestic tax policy. The Petroleum Division’s notification confirmed that the government continues to levy Rs114 per litre in taxes and duties on petrol and Rs100 per litre on diesel, with the levy on diesel specifically increased by Rs1.72 per litre, raising it from Rs78.28 to Rs80 per litre, even as the underlying ex-refinery price fell sharply enough to still produce an overall cut for consumers. Officials said Wednesday’s revision came just a day after the government had raised both petrol and diesel prices, by Rs3.34 and Rs5.27 per litre respectively, underscoring how volatile the daily pricing mechanism has made short-term fuel costs since its introduction last month.

That volatility has been driven largely by renewed hostilities in the Middle East, which have pushed global crude and refined product prices sharply higher in recent months. Diesel prices in Pakistan had climbed as high as Rs520.35 per litre on April 3, after rising from Rs281 per litre when tensions between the United States and Iran first escalated in late February. Wednesday’s Rs32.63 cut, while substantial, still leaves diesel priced well above where it stood before that spike began, even as officials framed the reduction as evidence the government was successfully managing the fallout from international volatility on behalf of domestic consumers.

Malik also used the press conference to highlight broader relief measures the government has taken despite operating under an ongoing International Monetary Fund programme, pointing to an allocation of more than Rs100 billion for public relief even as the country remains bound by IMF-linked fiscal constraints. He said the government understood the economic difficulties facing ordinary Pakistanis and remained committed to shielding the public from the worst effects of global price volatility, even as officials acknowledged that diesel crack margins internationally had widened significantly, reaching as much as 60 to 70 dollars above crude oil prices, a gap that has made refining economics increasingly difficult to manage without government intervention.

The Economic Coordination Committee separately approved a Rs1.34 per litre increase in the profit margin paid to petroleum dealers, raising the fixed margin from Rs8.64 to Rs9.98 per litre, a move officials said was necessary to avert a threatened nationwide strike by the Pakistan Petroleum Dealers Association. That adjustment will take effect from September 1, layering an additional cost onto the retail price structure even as Wednesday’s diesel cut delivers relief on the headline number.

With Thursday’s prices now in effect, the wider political backdrop remains unchanged. Jamaat-e-Islami’s ongoing campaign against the petroleum levy, which has kept sit-ins running outside Governor Houses in Karachi, Lahore, Peshawar and Quetta in recent days, is likely to seize on the continued existence of a Rs114 per litre tax load on petrol as evidence that even a sharp diesel cut does little to address the party’s core demand of bringing fuel prices down to Rs225 per litre through the removal of the levy altogether.

Compiled by the Weekly PK Staff Desk.