By Staff Reporter
ISLAMABAD: The government has announced a hike in petrol prices by up to Rs9.66 per liter starting on Monday, as stated by the Finance Division, attributing the increase to the rising cost of petrol in the global market.
Conversely, the price of high-speed diesel (HSD) has been reduced by Rs3.32 per liter.
Following the adjustments, petrol will now cost Rs289.41 per liter, while HSD will be priced at Rs282.24 per liter.
The government said that the price of petrol has surged internationally over the past two weeks, whereas HSD prices have seen a slight decline.
“The price of petrol (Motor Gasoline) has increased in the international market during the last fortnight, while the price of HSD has marginally declined,” a government notification read. “The government has accordingly decided to revise the existing consumer prices of petroleum products.”
“The consumer price of HSD has accordingly been decreased once again, after a downward revision in the middle of March 2024,” it said.
The latest price revision comes as Prime Minister Shehbaz Sharif’s administration is negotiating a new long-term financial rescue package with the International Monetary Fund (IMF).
The country is in dire need of this bailout to bolster its foreign reserves and avert a macroeconomic crisis that has led to a significant drop in reserves and a weakening of the currency against the US dollar over the past two years.
Past increases in petrol and gas prices, aligned with the IMF’s fiscal goals, have sparked inflationary pressures and nationwide protests. The new IMF program will require Pakistan to adhere to stringent measures to remain on a path to recovery, limiting the government’s ability to provide relief to an increasingly frustrated populace and support industries seeking growth incentives.
Inflation soared to 38 percent with a record depreciation of the rupee during Sharif’s previous tenure from April 2022 to August 2023, primarily due to structural reforms mandated by the IMF.
The country remains mired in an economic crisis, with inflation still high at around 30 percent and economic growth decelerating to approximately 1 percent.
Petroleum and electricity prices remain primary contributors to the persistent high inflation rates. Petrol, predominantly used in private transport, small vehicles, rickshaws, and two-wheelers, continues to impact the budgets of the middle and lower-middle classes significantly.
In its last fortnightly review, the government maintained the petrol price at Rs279.75 per liter and decreased the HSD rate by Rs1.77 per liter to 285.56 rupees.
The petrol price was projected to rise mainly due to increased import premiums and global prices, while the HSD price was expected to decrease in the international market, with the import premium paid by Pakistan State Oil (PSO) remaining at $6.50 per barrel.
Officials noted that the petrol price had increased by roughly $4 per barrel to $94.5 in the last two weeks, while the HSD price had marginally dropped by about 60 cents per barrel to $98.4. The exchange rate has also shown improvement, with the rupee gaining about 1 per dollar to $278.6 over the same period.
The government is imposing a petroleum development levy (PDL) of Rs60 per liter on both petrol and HSD, the maximum allowed by law. Under its commitments to the IMF, the government aimed to collect Rs869 billion in PDL for the current fiscal year. Approximately Rs475 billion have been collected in the first half (July-December), and the total is expected to reach around Rs970 billion by year-end, despite the annual target being revised to Rs920 billion.
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