Fuel prices on the rise again

ISLAMABAD: Petroleum prices are estimated to go up again this week due to increasing energy costs, caused by factors like the falling currency value and rising global oil prices.

According to Dawn.com, sources said that both key petroleum products, gasoline and high-speed diesel (HSD), are expected to increase by approximately PKR10-14 and PKR14-16 per liter, respectively, on September 15 for the forthcoming fortnight. Kerosene prices are also anticipated to rise by about PKR10 per liter, based on existing tax rates and import parity prices.

The Pakistani rupee initially depreciated by PKR4.5 against the US dollar in the first ten days of the current fortnight, sliding below PKR300, before benchmarks for international Brent crude oil prices surged beyond $92 per barrel on Wednesday, nullifying any potential benefits from the exchange rate.

Additionally, the government intends to pass on an approximately 88 paise per liter impact of increased sale margins for petroleum dealers and marketing companies, a measure previously approved by the Economic Coordination Committee (ECC) of the cabinet last week.

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Sources indicated that import parity prices for gasoline, diesel, and kerosene have climbed by roughly PKR13, PKR14, and PKR10 per liter, respectively, since September 1.

However, sale prices are projected to increase by PKR13, PKR16, and over PKR10 per liter, respectively, based on Pakistan State Oil’s product imports. Jet fuels are also expected to become costlier by PKR10 per liter.

In light of these developments, gasoline and diesel prices are estimated to surpass PKR320 and PKR325 per liter, respectively, with kerosene prices hovering around PKR240 per liter.

HSD plays a pivotal role in the transport sector, predominantly utiliSed in heavy transport vehicles, trains, and agricultural machinery such as trucks, buses, tractors, tube wells, and threshers. It has a direct impact on the prices of vegetables and other consumables.

On the other hand, gasoline is primarily used in private transport, small vehicles, rickshaws, and two-wheelers, directly affecting the budgets of middle and lower-middle-class individuals.

The impending petroleum product price hikes follow a significant 27.4 per cent increase in the August inflation rate, which is expected to exert a delayed impact on overall prices in the country in the coming days and weeks.

Currently, the Goods and Services Tax (GST) is set at zero per cent for all petroleum products, while the government imposes a petroleum development levy (PDL) of PKR60 per liter on gasoline and PKR50 per liter on HSD and high octane blending component and 95RON gasoline.

Customs duties of approximately PKR18 to PKR22 per liter are also levied on gasoline and HSD. Gasoline and HSD constitute the primary revenue generators, with monthly sales of approximately 700,000-800,000 tonnes per month, compared to a monthly demand of just 10,000 tonnes for kerosene.