Diesel Prices Cut by Rs14 Per Litre While Petrol Rates Remain Unchanged

The government on Monday announced a major cut in diesel prices, reducing the high-speed diesel (HSD) price by Rs14 per litre, while keeping petrol prices unchanged for the fortnight ending December 31, following favourable international oil market trends.

According to a late-night notification issued by the Petroleum Division, the fuel price revision was made in line with fluctuations in global oil prices and recommendations from the Oil and Gas Regulatory Authority (OGRA).

As per the announcement, the ex-depot price of high-speed diesel (HSD) has been slashed by Rs14 per litre (5%), bringing it down to Rs265.65 per litre from Rs279.65 per litre. Diesel is widely used in the transport, agriculture, and industrial sectors, making its price highly inflation-sensitive.

HSD is primarily consumed by trucks, buses, trains, tractors, tube-wells, and agricultural machinery, and directly affects the cost of food items, vegetables, and other essentials.

Despite previous reductions, transport fares remain high, as transporters had increased rates after a Rs27 per litre hike between May and August, and have yet to roll back fares even after a Rs9 per litre reduction earlier.

Meanwhile, the ex-depot petrol price has been kept unchanged at Rs263.45 per litre. Petrol is mainly used in private vehicles, motorcycles, rickshaws, and small cars, directly impacting the middle and lower-middle income groups.

Although General Sales Tax (GST) remains zero on petroleum products, the government continues to collect Rs78 per litre on diesel and Rs82 per litre on petrol and high-octane fuels under the petroleum levy, along with a Rs2.50 per litre Climate Support Levy (CSL).

In addition, the government imposes custom duties of Rs16–17 per litre on both petrol and diesel, regardless of whether they are locally produced or imported. Around Rs17 per litre is also charged as distribution and dealer margins by oil companies.

Petrol and HSD remain the largest revenue-generating petroleum products, with combined monthly sales of 700,000 to 800,000 tonnes, compared to just 10,000 tonnes of kerosene consumption.

The government collected approximately Rs1.161 trillion through the petroleum levy in FY2025 and expects revenue to rise by 27% to Rs1.470 trillion in the current fiscal year.