
Amer Hilabi—AFP
Finance Ministry says it has passed on impact of international prices, but kept petroleum levy and sales tax to ‘minimum’ levels
The Ministry of Finance late on Tuesday notified new tariffs for all petroleum products, raising prices by Rs. 10-12/liter for the next two weeks (till Feb. 28) in line with a recent surge in international oil prices.
“The prices of petroleum products are showing drastic increase in the international market and presently are at the highest level since 2014,” read a press release announcing the new rates; prices of fuel in Pakistan in 2014 ranged from Rs. 110-120/liter owing largely due to a better currency exchange rate, with the dollar peaking at around Rs. 106 as compared to Rs. 176 right now.
“Despite the unabated increase since the beginning of the year, Prime Minister Imran Khan deferred the last review of petroleum products’ prices on Jan. 31 and advised against the summary of OGRA [Oil and Gas Regulatory Authority],” read the Finance Ministry statement, adding that the government had decided to levy no sales tax “to provide utmost relief” and reduced petroleum levy, resulting in Rs. 35 billion in “losses” against budgeted rates.
According to the notification, petrol prices have been hiked by Rs. 12.03, bringing them to a record-breaking Rs. 159.86/liter from Rs. 147.83. Similarly, high-speed diesel tariffs have been hiked by Rs. 9.53, bringing them to Rs. 154.15/liter from Rs. 144.62.
The price of kerosene has been raised by Rs. 10.08/liter, from Rs. 116.48 to Rs. 126.56/liter, while the price of light diesel oil has been increased by Rs. 9.43/liter from Rs. 114.54 to Rs. 123.97/liter.
This is the first time in Pakistan’s history that prices of petrol and diesel have crossed the psychologically significant rate of Rs. 150/liter. In addition to passing on the impact of higher international oil prices, the government has also levied additional petroleum levy, as it had committed to the International Monetary Fund (IMF) to revive a stalled $6 billion Extended Loan Facility and receive the latest tranche of $1 billion. However, the GST rate on all these products has been kept unchanged at zero.
There has been a marked surge in prices of benchmark crude in the international market, hitting approximately $95/barrel in owing to concerns over a potential war between Russia and the Ukraine. Analysts have warned that if a conflict breaks out, it could drive up fuel prices even further, setting off a domino effect that could boost already-rampant inflation even further.