Petrol, diesel prices set to surge again in coming review

ISLAMABAD: Continuing with the rising trend, the major petroleum products — petrol and high-speed diesel (HSD) — are estimated to increase by more than Rs7.60 and Rs3.50 per litre, respectively, with effect from July 16 for the next fortnight, mainly because of higher global oil prices.

Sources said the prices of petrol and HSD had increased in the international market by about $4.4 and $2 per barrel, respectively, in the last fortnight. Depending on final calculation and existing tax rates, the price of petrol is projected to rise by Rs7.60 per litre and that of HSD by Rs3.50.

The government has jacked up the maximum limit of petroleum development levy (PDL) to Rs70 per litre in the Finance Bill to collect Rs1.28 trillion in the current fiscal year against Rs960bn collection during the previous year, almost Rs91bn higher than the Rs869bn budget target.

During the current fortnight, import premiums on both petrol and HSD have remained unchanged at $9.60 and $6.50 per barrel, respectively. On the other hand, the rupee depreciated by about 17 paise against the dollar during the fortnight.

Rising global oil prices likely to push petrol up by Rs7.60, diesel by Rs3.50 per litre

The petrol and HSD prices had increased by Rs7.45 and Rs9.56 per litre on June 30.

The ex-depot prices for petrol and HSD, thus, stand at Rs265.61 and Rs2.77.45 per litre, respectively.

Between May 1 and June 15, petrol and high-speed diesel prices were reduced by about Rs35 per litre and Rs22 per litre, respectively.

The government currently charges about Rs77 per litre tax on both petrol and HSD. Although the general sales tax (GST) is zero on all petroleum products, the government charges Rs60 per litre PDL on both products, which normally impacts the masses. The government is also charging about Rs17 customs duty on a litre of petrol and HSD, irrespective of their local production or imports.

Petroleum and electricity prices have been the key drivers of high inflation. Petrol is mostly used in private transport, small vehicles, rickshaws and two-wheelers.

On the other hand, an increase in diesel’s price is considered highly inflationary as it is mostly used in heavy transport vehicles and particularly adds to the prices of vegetables and other eatables.

Published in Dawn, July 13th, 2024