The Finance Division on Monday night notified rates for petroleum products for the next two weeks, raising the price of petrol by Rs. 6.72/liter and reducing the cost of high-speed diesel by Rs. 0.51/liter.
“In the wake of fluctuations in petroleum prices in the international market and exchange rate variations, the government has decided to revise the existing prices or petroleum products to pass on the impact to the consumers,” read a statement issued by the Finance Division announcing the decision.
According to the rates issued by the Finance Division, petrol has been jacked up from Rs. 227.19 to Rs. 233.91/liter; high-speed diesel reduced from Rs. 244.95 to Rs. 244.44/liter; kerosene from Rs. 201.07/liter to Rs. 199.4/liter; and light-diesel oil increased from Rs. 191.32/liter to Rs. 191.75/liter.
The new prices came into effect from Aug. 16 (Tuesday).
The rate increase for petrol has invited much criticism from the public, which has questioned why a recent decline in global prices for petroleum products and the rupee’s improvement against the U.S. dollar has not been passed down to the consumer. Pakistan Muslim League (Nawaz) Vice-President Maryam Nawaz, whose party heads the ruling coalition at the center, said she could not support the government’s decision to place further burden on inflation-stricken consumers.
“[Nawaz Sharif] strongly opposed this decision and even said I cannot burden the people with even a single penny more in pricing,” she wrote in a posting on Twitter. “[He said] if there are any compulsions on the government [to raise prices], I cannot be involved in it and left the meeting,” she added.
By contrast, Finance Minister Miftah Ismail—also a member of the PMLN—justified the petrol price hike by stressing that it was based on global prices and no new taxes or duties had been imposed. “OGRA [Oil and Gas Regulatory Authority] takes the average of Platt prices, adds freight and premium paid by PSO [Pakistan State Oil] on top of these prices, and multiplies that by the exchange rate. In addition it also ‘trues up’ the previous fortnight’s cost by taking into account the rupees paid by PSO at the actual exchange rate as opposed to the average used to estimate the previous fortnight’s cost,” he wrote in a series of posts on Twitter.
“We have not added any new tax or levy to the price. The price of petrol has gone up (and diesel has gone down) because the cost paid by PSO in the previous fortnight was more than the cost estimated by OGRA and also because the premium paid by PSO on petrol increased and premium paid on diesel remained unchanged,” he said.
To criticisms from journalists that he had vowed to not increase petroleum prices just a day earlier, he stressed that he had promised not to impose any new taxes or levies and had fulfilled it. “I am an easy target. Which is fine. But this price change only reflects the change in PSO costs and doesn’t have any new taxes,” he said. “People are welcome to critique or criticize me. I know I am sincere to my country and have saved it from default and working to the best of my ability,” he added.
The government is currently charging a petroleum development levy of Rs. 20/liter on petrol and Rs. 10/liter each on high-speed diesel, kerosene and light-diesel oil in line with a commitment with the international Monetary Fund. Under the deal with the global lender, the government must gradually increase PDL on oil products to a maximum of Rs. 50/liter and collect Rs. 855 billion in taxes during the ongoing fiscal year.