Petrol, diesel prices jacked up by Rs35

In another unpopular decision, the coalition government jacked up the prices of petrol and high speed diesel (HSD) by a whopping Rs35 per litre, two days ahead of the scheduled announcement of fuel prices in the country.

The fuel price hike comes amid a massive depreciation of the rupee against the US dollar. There were already rumours about a big increase in prices of petroleum products. It is learnt that the retail outlets of petroleum products forced the government to announce the new prices on Sunday.

Usually, fuel prices are adjusted on a fortnightly basis. Change in the prices or unchanged prices are announced on every 15th and the last day of the month, effective 1st and the 16th. However, Finance Minister Ishaq Dar announced the latest price hike on 29th of January, instead of 31st.

With the increase of Rs35, according to the announcement, the petrol prices jumped from Rs214.80 to Rs249.80, while the HSD prices rose from Rs227.80 to Rs262.80. Similarly, the prices of kerosene oil rose by Rs18, from Rs171.83 to Rs189.83, and light diesel oil from Rs169.00 to Rs187.00.

Earlier, there were rumours about the massive increase in fuel prices in the wake of rupee’s free-fall last week. This led to the closure of the retail outlets of petroleum products, hence the government was forced to announce new prices on Sunday, a couple of days before the scheduled time.

The move aimed at resuming the sale of petroleum products at retail outlets. This appeared to be a failure of the government to take action against the petrol pump owners who hoarded the fuel stocks and dropped a petrol bomb on the consumers.

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Currently, the government is charging Rs50 per litre petroleum levy on petrol. It also raised the rate of the levy on the HSD by Rs5 per litre to Rs40 per litre on Sunday. Also, it raised prices of petroleum products, on the one hand, and put an additional burden of Rs7.49 per litre on oil marketing companies (OMCs) on account of freight margin, on the other.

The government allowed the Inland Freight Equalization Margin (IFEM) to the OMCs to transport petrol to different oil depots across the country. It went to negative Rs3.21 per litre during the ongoing month to negative Rs10.70 per litre.

This means that the OMCs will not be receiving any freight rate on transportation of petrol, rather they would be bearing the burden of Rs10.70 per litre on petrol.

Dar announced the hike in the prices of all the petroleum products, in a short televised address on Sunday morning. “The new prices will come into effect within next two to three minutes, by 11am,” the finance minister said, adding that the new prices would be effective till February 15, 2023.

Dar also said that the increase was being made immediately on the recommendation of the Oil and Gas Regulatory Authority (Ogra), which had reported artificial shortages and hoarding of fuel in anticipation of price rises. “Hence this price hike is being done immediately to combat the artificial shortage.”

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Dar recalled that during the last four months, from October to January 29, the price of petrol was not increased, while the prices of diesel and kerosene oil were decreased. The rupee depreciated by almost 12% against the dollar last week, while the oil prices increased by 11% in the international market.

“Despite the international prices and the rupee devaluation, on directions of Prime Minister Shehbaz Sharif, it has been decided to make the minimum increase in the prices of these four products,” he said.

The retails outlets stopped selling the fuel on Saturday after speculation of up to Rs80 per litre increase in the prices of Petrol and HSD. The minister expressed the hope that the announcement of new prices would dispel the rumours that petrol supplies were running dry.