After taxes in budget, fuel prices also jacked up

After offering relief to consumers in the last three revisions of oil prices, the federal government increased the prices of petroleum products by up to Rs9.56 per litre on Sunday in view of fluctuations in the global fuel prices.

The new rates are taking effect on the first day of a tax-laden budget. According to a notification, the price of petrol was raised by Rs7.45 per litre, while the high-speed diesel (HSD) went up by Rs9.56 per litre.

The finance ministry issued the notification regarding the increase in petroleum product prices, saying that the new prices would take effect from Monday (today) and remain in place for the next 15 days.

The price of petrol had been increased from Rs258.16 to Rs265.61 per litre, while the price of HSD was increased from Rs267.89 to Rs277.49 per litre, according to the notification.

Sources said the price of light diesel had also been increased by Rs9.88 per litre, and the price of kerosene oil had been jacked up by Rs10.05 per litre.

The increase in petroleum product prices has been made based on the Oil and Gas Regulatory Authority’s (Ogra) recommendations and with the prime minister’s approval.

The increase announced in the budget for the petroleum development levy has not been included in these prices; rather the rise is due to the increase in oil prices in the international market.

The government is charging a Rs60 per litre petroleum levy on petrol and HSD, whereas they are exempt from the general sales tax (GST).

In case the government decides to raise the levy on both petrol and HSD by Rs5 per litre, the prices of petrol and HSD would go up further by Rs12.54 and Rs14.84 per litre, respectively.

The Finance Bill 2024 has proposed a maximum petroleum levy limit of Rs80 per litre, aiming to collect Rs1.28 trillion in the new fiscal year, up from the outgoing fiscal year estimates of Rs869 billion.

Over the past fortnight, international prices for petrol and HSD have surged by approximately $4.4 and $5.5 per barrel, respectively. Premium on petrol is calculated at $9.590 per barrel and $6.50 per barrel, same as the previous review.

HSD is widely used in the transport and agriculture sectors. Therefore, an increase in its price will have inflationary effects on consumers, who have been enjoying a relief due to cuts in the prices.