Govt set to hike petrol prices by over Rs3/litre
The caretaker government is likely to increase the prices of petrol by over Rs3 per litre, effective from March 1, 2024. However, it may maintain the price of high-speed diesel (HSD) due to a marginal increase in its price.
The increase in the price of high-speed diesel has been worked out at Rs0.99 per litre and kerosene oil at Rs0.82 per litre. The price of light diesel oil (LDO) has been estimated to come down by Rs0.77 per litre.
Due to expected exchange rate adjustment, the price of petrol may go up to Rs2.94 per litre and diesel to Rs0.49 per litre. The oil price revisions are based on a higher premium, exchange rate adjustment, and the current petroleum levy and general sales tax (GST) rate on petroleum products. An increase in the price of HSD may have an inflationary impact as it is usually used in the transportation sector.
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The import premium on petrol is estimated at $10.48 per barrel, whereas the premium on high-speed diesel is estimated at $6.50 per barrel. The government is charging Rs60 per litre petroleum levy on both high-speed diesel and petrol.
The inland freight equalisation margin (IFEM) is Rs7.52 per litre on petrol and Rs3.92 per litre on high-speed diesel. The Oil and Gas Regulatory Authority (Ogra) has yet to work out the recommended fuel prices for the first half of March. The authority will calculate the price of petroleum keeping in view monthly tax targets and the estimated fuel consumption and supply cost of Pakistan State Oil (PSO).
The sale of total petroleum products in Pakistan clocked in at 1.38 million tonnes in January, a decline of 4% year-on-year compared to 1.44 million in the same period of the previous year. The decline comes on the back of lower petrol and diesel sales.
Published in The Express Tribune, February 28th, 2024.
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