Despite a nearly 3 per cent drop in global oil prices, the government is expected to increase petrol price for the upcoming fortnight, starting March 1.
Sources privy to the matter said the final estimate on February 28 suggests that the ex-depot price of petrol is likely to increase by Rs4 to Rs4.50 per litre.
However, the prices of high-speed diesel (HSD) and kerosene may see a minor decline of less than Rs1 per litre.
The proposed increase in petrol prices comes amid a slight uptick in international rates and a depreciation of the rupee against the US dollar.
While benchmark Brent crude oil prices have remained relatively stable over the past ten days, exchange rate volatility has contributed to the anticipated hike in local fuel prices.
Current petrol, deisel prices in Pakistan
At present, ex-depot petrol is priced at Rs256.13 per litre, while HSD is available at Rs263.95 per litre. The official price of kerosene stands at Rs171.65 per litre, though it is being sold at Rs300 to Rs350 per litre in many areas due to supply constraints.
The government collects around Rs76 per litre in taxes on petrol and HSD, including a Petroleum Development Levy (PDL) of Rs60 per litre. While the General Sales Tax (GST) remains at zero, the authorities levy an additional customs duty of Rs16 per litre on both products, regardless of whether they are locally refined or imported.
In addition to government-imposed levies, oil companies and dealers charge a combined distribution and sales margin of Rs17 per litre on petrol and HSD. Meanwhile, light diesel oil and high-octane blending products are subject to a Rs50 per litre levy, with the same rate applied to 95-RON petrol, primarily used in luxury vehicles.
Impact on consumers
Petrol is a key fuel for private transport, small vehicles, motorcycles, and rickshaws, making it an essential commodity for middle and lower-middle-class consumers. Any increase in its price directly impacts household budgets, further burdening the masses already struggling with inflation.
Meanwhile, HSD plays a critical role in the transport and agriculture sectors, as it is widely used in trucks, buses, trains, tractors, tube wells, and threshers. A price hike in diesel often leads to higher transportation costs, escalating prices of essential commodities, including vegetables and other food items.
Global oil prices decline
According to a Reuters report, global oil prices declined by approximately 3 per cent to a two-month low in New York on Tuesday amid weak economic data from the United States and Germany, raising concerns over lower energy demand.
At 1:09 pm local time, Brent crude futures fell $1.99 (2.7%) to $72.79 per barrel, while US West Texas Intermediate (WTI) crude dropped $1.92 (2.7%) to $68.78 per barrel. Several indications from oil-producing nations suggest that production levels remain on track to increase, further impacting global oil prices.
