The federal government has announced an increase in fuel prices, with petrol prices rising by Rs9.99 per litre and high-speed diesel (HSD) by Rs6.18 per litre. The hike comes into effect immediately and is attributed to fluctuations in the international oil market, this adjustment means the new petrol price stands at Rs275.6 per litre, while HSD is priced at Rs283.63 per litre.
Government Hikes Fuel Prices Amid Global Market Variations
The decision to hike petrol prices follows a notification from the Finance Division, which cited global oil price variations as the primary reason for the increase. Despite the lack of changes in applicable duties and taxes, the prices of petrol and HSD surged by approximately $4.4 and $2 per barrel, respectively, over the past fortnight, this increase surpasses the anticipated rise of Rs7.60 and Rs3.50 per litre for petrol and HSD.
The government aims to collect Rs1.28 trillion this fiscal year through the Petroleum Development Levy (PDL), having raised the maximum limit to Rs70 per litre in the Finance Bill; this is a huge jump from the Rs960 billion collected last year. Moreover, the import premiums for both petrol and HSD have remained stable at $9.60 and $6.50 per barrel, respectively; however, the depreciation of the rupee by about 17 paise against the dollar has further impacted the pricing.
Economic Impact
The government currently imposes around Rs77 per litre in taxes on both petrol and HSD, including a Rs60 per litre PDL and about Rs17 customs duty. Although the general sales tax on petroleum products is zero, these levies significantly impact consumers. The increase in petrol prices affects private transport, small vehicles, rickshaws, and two-wheelers, while the hike in diesel prices is expected to drive up the cost of goods and services, particularly vegetables and other essentials, due to its use in heavy transport vehicles.
Also read: Government Slashes Petrol Price by Rs10.2 per Litre
