The country is bracing for a significant hike in petrol prices, which are expected to rise by up to Rs. 16 a litre beginning September 16.
Meanwhile, the caretaker government recently authorized price increases for both petrol and diesel, causing gasoline prices to breach the historic Rs. 300 per litre threshold for the first time in the country’s history.
Petrol Prices Expected To Rise by Rs. 16/Liter
This upcoming hike would place an additional strain on citizens, as the ex-depot price is slated to jump from Rs. 305.36 to Rs. 321.35 per litre.
However, the upcoming fortnight of September is expected to see significant price increases in the oil sector, with petrol expected to rise by Rs. 15.99 per litre, high-speed diesel (HSD) by Rs. 13.66 per litre, kerosene oil by Rs. 8.79 per litre, and light diesel oil (LDO) by Rs. 4.45 per litre.
These figures are based on existing government taxes on petroleum products, which include a petroleum levy (PL) of Rs. 55 per litre on petrol and Rs. 50 per litre on HSD—a move in line with International Monetary Fund (IMF) requirements.
Rise In Fuel Levy
Furthermore, the caretaker administration may consider raising the fuel levy rate to Rs. 60 per litre for diesel in order to meet its promise to the IMF.
The government additionally collects a petroleum charge of Rs. 60 per litre on High-Octane Blending Component (HOBC).
The government collected Rs. 75 billion in petroleum levy costs from oil consumers in August, with similar receipts expected in September.
Rise In Other POL Products Prices
If the increase is authorized, the price of HSD could rise to Rs. 325.50 per litre, up from Rs. 311.84 per litre now.
Diesel is heavily used in the transportation and agricultural sectors, thus any additional increase in its price will have a significant inflationary impact.
Kerosene oil prices may also rise from Rs. 233.52 to Rs. 243.54 per litre.
Kerosene is utilized for cooking in rural places, particularly in northern sections of the country where LPG is not available. The Pakistan Army is also a major user in these areas.
LDO, which is used in industries, may see its price jump from Rs. 210.13 to Rs. 218.92 per litre.
Rupee Depreciation Effect
The rupee’s depreciation of Rs. 4.45 against the dollar has an impact on oil prices.
The government may enable Pakistan State Oil (PSO) to modify the exchange rate on petrol and HSD to Rs. 3 per litre.
As global commodity prices continue to rise, oil prices will rise again in the second half of September.
Brent crude futures were trading about $ 92.14 per barrel. Last week, Saudi Arabia and Russia stated that they would extend voluntary supply restrictions of 1.3 million barrels per day until the end of the year.
To read our blog on “Petroleum sales declined by 8% in August 2023,” click here.