Finance Division cites increase in international oil prices for second surge in fuel tariffs in less than a month
The Government of Pakistan on Saturday notified a Rs. 10.49/liter increase to the price of petrol, and a Rs. 12.44/liter hike to high-speed diesel prices, citing a surge in oil prices globally for the decision.
“At present, oil prices have risen [to] around $85 a barrel (Global Benchmark Brent), highest since October 2018,” read the summary issued by the Finance Division. It stressed that the prices of the entire energy chain had surged in the past few months “due to higher demand for energy inputs and supply bottlenecks.”
Claiming that the government had “absorbed” the pressure and provided “maximum relief” to consumers by keeping the petroleum development levy and sales tax at “minimum” levels, it said the prices proposed by the Oil and Gas Regulatory Authority had been approved. It did not specify the exact value of either the sales tax or PDL.
The new prices of fuel, with effect from Oct. 16 (today), are as follows:
- Petrol – Rs. 137.79/liter (up Rs. 10.49 from Rs. 127.3/liter)
- High-speed diesel – Rs. 134.48/liter (up Rs. 12.44 from Rs. 122.04/liter)
- Kerosene – Rs. 110.26/liter (up Rs. 10.95 from Rs. 99.31/liter)
- Light diesel oil – Rs. 108.35/liter (up Rs. 8.84 from Rs. 99.51/liter)
This is the second time the government has raised fuel prices in this month alone; at the start of the month, it had raised the price of petrol by Rs. 4/liter. OGRA notifies fuel price revisions every two weeks based on prevailing international prices and advises the government to increase or decrease local rates accordingly. The current prices, while motivated by international prices, are the highest ever in Pakistan’s history, owed somewhat to the ongoing devaluation of the Pakistani rupee against the U.S. dollar.
Finance experts have warned that this price increase will boost inflation in the coming days, as transportation costs rise for all major commodities. The government has claimed it would soon introduce a targeted subsidy to facilitate the most impoverished citizens. However, observers have stressed that these policies ignore Pakistan’s middle classes, which are already struggling to keep abreast of the pressure of earlier oil price hikes; a surge in electricity tariffs; and ongoing double-digit inflation for essential commodities.