In reaction to current trends in the global oil market, the interim government recently imposed yet another round of price increases for petroleum items. The government increased the cost of gasoline and high-speed diesel (HSD) on Friday night by Rs. 26.02 and Rs. 17.34, respectively.
Due to this rise, the price of gasoline has now increased to Rs331.38 per litre, while the cost of HSD has decreased to Rs329.18 per litre, according to information posted by the Ministry of Finance on the social media site X (formerly known as Twitter) after midnight. Notably, the costs for kerosene or light diesel oil have not changed in this most recent modification.
This price increase comes after the interim administration sharply increased petrol prices on September 1st by as much as Rs18 per litre. Similar hikes in August had preceded this earlier adjustment.
— Ministry of Finance (@FinMinistryPak) September 15, 2023
Currency changes and a minor increase in global oil costs, for example, had an impact on the decision to hike pricing. Informed sources have earlier predicted that, given current tax rates and import parity prices, the price of gasoline and HSD might rise by roughly Rs 10–14 and Rs 14–16 per litre, respectively, and that the price of kerosene might rise by roughly Rs 10 per litre as well.
The rupee lost 4.5 rupees versus the dollar over the current fortnight, although it afterwards started to normalize. While this was going on, benchmark Brent prices increased internationally from $88 to above $92 per barrel, canceling out any gains from the exchange rate adjustment.
Additionally, greater sales margins for petroleum dealers and marketing firms that were agreed by the Economic Coordination Committee (ECC) of the cabinet in the previous week will result in an increase for consumers of about 88 pence per litre.
According to estimations, beginning September 1st, the import parity prices for gasoline, diesel, and kerosene have increased by about Rs. 13, Rs. 14, and Rs. 10 per litre, respectively. As a result, sale prices for gasoline and diesel are anticipated to exceed Rs320 per litre, while kerosene prices are anticipated to approach the higher end of the spectrum at about Rs240 per litre.
The price of important commodities like vegetables is affected by the widespread use of high-speed diesel in agricultural engines, railways, and large transport vehicles. The cost of gasoline, which is mostly utilized in private transportation and smaller cars, directly affects the household budgets of middle- and lower-middle-class people.
The difficulties brought on by the August inflation rate, which increased by more than 27.4 percent, are exacerbated by the most recent price increases. In the upcoming days and weeks, it’s anticipated that this inflationary pressure will have an impact on the nation’s general prices.
The government currently charges a petroleum development levy (PDL) of Rs60 per litre on gasoline and Rs50 per litre on high-octane blending components and 95RON gasoline, even though all petroleum products are currently exempt from the GST. Additionally, petrol and HSD are subject to customs duties that range from Rs18 to Rs22 per litre.
When compared to the monthly demand for kerosene, which is merely 10,000 tonnes, the monthly sales of petrol and HSD, which range from 700,000 to 800,000 tonnes, significantly contribute to government revenue.
