Petrol, diesel prices may go up by Rs9 per litre

ISLAMABAD: The prices of petrol and high-speed diesel (HSD) are estimated to go up by Rs5-9 per litre on Jan 31 for the next fortnight owing to higher international prices and import premiums, nullifying an impact of minor exchange rate gains.

Informed sources said the prices of both major petroleum products – petrol and HSD – had increased in the international market over the past fortnight and Pakistan State Oil (PSO) also had to pay higher import premiums even though the rupee had gained against the US dollar.

As a result, the price of HSD will go up by Rs4-6 per litre and that of petrol will rise between Rs6.5 to 9 per litre, depending on the final exchange rate calculation. The prices of Kerosene and light diesel oil are also expected to remain unchanged.

Officials said the price of petrol had come down by more than $3 per barrel to $86.5 from $83 per barrel over the last two weeks while HSD had become costlier by about $2 per barrel to $97.5 from about $95.6. The rupee on the other hand gained by about Rs1.5 against the dollar to about Rs280 from Rs281 in the first half of January. The premium paid by PSO for securing product cargoes went up on both products by $2 per barrel each. It increased to $6.5 per barrel from $4.2 for HSD and from $7.5 per barrel to $9.5.

The government has already achieved a Rs60 per litre petroleum levy – the maximum permissible limit under the law – on both petrol and HSD. The government had set a budget target to collect Rs869bn as petroleum levy on petroleum products during the current fiscal year under the commitments made with the International Monetary Fund (IMF) but is hoping the collection to go beyond Rs920bn by the end of June.

Petroleum and electricity prices have been the key drivers of the high rate of CPI-based inflation recorded at 29.7pc in December 2023.

Petrol is mostly used in private transport, small vehicles, rickshaws and two-wheelers and has a direct bearing on the budget of the middle- and lower-middle class. On the other hand, HSD price is considered highly inflationary as it is mostly used in heavy transport vehicles, trains and agricultural engines like trucks, buses, tractors, tube wells and threshers, and particularly adds to the prices of vegetables and other eatables.

Although the general sales tax (GST) is zero on all petroleum products the government is charging Rs60 per litre PDL on both products.