Government jacks up fuel prices

ISLAMABAD: The caretaker government on Saturday night announced its first major executive order by jacking up the petrol price by PKR26.2 per litre.

According to official notification, the new petrol price stands at PKR 331.38 per litre, while diesel price has been increased by PKR17.34 resulting in a new diesel price of PKR329.18 per litre.

Notably, this latest adjustment does not affect the rates of kerosene or light diesel oil, remaining constant from previous levels.

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— Ministry of Finance, Government of Pakistan (@Financegovpk) September 15, 2023

In a move attributed to the escalating trend of international petroleum prices, the government announced a significant increase in fuel prices, coming shortly after a substantial hike on September 1. The surge in prices is driven by existing tax rates, import parity prices, currency fluctuations, and a marginal uptick in global oil prices.

The September 1 increase, which raised fuel prices by up to PKR18 per litre, had followed similar hikes on August 15 by the interim government. Informed sources had hinted at the possibility of petrol and high-speed diesel (HSD) prices rising by approximately PKR10-14 and PKR14-16 per litre, respectively, for the next fortnight. Kerosene prices were also expected to climb by about PKR10 per litre, based on existing tax rates and import parity prices.

Currently, a zero Goods and Services Tax (GST) applies to all petroleum products. However, the government imposes a petroleum development levy (PDL) of PKR60 per litre on petrol and PKR50 each on HSD and high octane blending component and 95RON petrol. Additionally, customs duties of about PKR18 to PKR22 per litre are levied on petrol and HSD.

Petrol and HSD, with monthly sales of approximately 700,000-800,000 tonnes, serve as major revenue sources, while the monthly demand for kerosene stands at just 10,000 tonnes.