Government raises petrol price by Rs13.55 per liter

On Wednesday, the interim government announced a hike in the price of petrol, raising it by Rs13.55 per litre for the upcoming two weeks. As per the notification issued by the Finance Division, the new price of petrol stands at Rs272.89 per litre, up from the previous Rs259.34.

Additionally, the price of high-speed diesel (HSD) has been increased by Rs2.75 to Rs278.96 per litre. However, there were no alterations mentioned for the prices of light-diesel oil (LDO) and kerosene oil in the notification.

The increase in petrol prices surpasses earlier expectations. Initially estimated to rise by Rs5-9 per litre for the next fortnight due to elevated international prices and import premiums, the actual increase nullified the impact of minor exchange rate gains.

According to reliable sources, international market fluctuations led to a hike in the prices of both major petroleum products over the past two weeks. Despite a slight appreciation of the rupee against the US dollar, Pakistan State Oil (PSO) incurred higher import premiums.

While petrol prices dropped by over $3 per barrel to $86.5, HSD became pricier by about $2 per barrel to $97.5. Notably, the rupee gained Rs1.5 against the dollar, reaching approximately Rs280 from Rs281 in early January. PSO’s premium for securing product cargoes escalated to $6.5 per barrel from $4.2 for HSD and from $7.5 per barrel to $9.5.

The government has already reached the maximum permissible limit of Rs60 per litre for the petroleum levy, as mandated by law, on both petrol and HSD. With a budget target to collect Rs869 billion in petroleum levy during the current fiscal year under its commitments to the International Monetary Fund, the government anticipates exceeding Rs920 billion by June.

Notably, petroleum and electricity prices have significantly contributed to the high rate of CPI-based inflation, reaching 29.7 percent in December 2023.

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