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Sunday, May 19, 2024

Government Raises Petrol Price by Rs 13.55/Litre from Feb 1, 2024

This adjustment primarily aims to compensate for heightened taxes for current expenditures and to address the surge in global oil prices.

On Wednesday, the government implemented a significant increase in petrol prices, raising them by Rs13.55 per litre for the fortnight starting February 1-15. This adjustment primarily aims to compensate for heightened taxes for current expenditures and to address the surge in global oil prices.

Furthermore, the finance ministry announced a rise of Rs2.75 per litre in the price of high-speed diesel (HSD). Following this revision, petrol will now be priced at Rs272.89 per litre, up from Rs259.34, while diesel will cost Rs278.96 per litre, up from Rs276.21.

Read more: Major oil producing country to cut imports of petroleum products

Petrol finds its predominant use in motorbikes and cars, while diesel is crucial in the transport and agriculture sectors. Fluctuations in the price of High-Speed Diesel (HSD) directly impact consumers, leading to inflationary pressures. With gas load-shedding affecting the CNG sector in February, petrol, often an alternative, is expected to witness high demand.

In Punjab, the CNG sector has been without indigenous gas for several years, relying entirely on imported gas. CNG outlets in other provinces also face load-shedding due to gas shortages in the country.

“The government of Pakistan has decided to adjust the current prices of petroleum products during the fortnight starting from 1st February 2024, as recommended by the Oil and Gas Regulatory Authority (OGRA),” stated the finance ministry.

Read more: Government Announces Significant Cut in Petroleum Prices

Pakistan, being a net importer of petroleum products, reflects premiums on oil imports in its prices. The import premium on petrol is estimated at $9.47 per barrel, while the premium on HSD is estimated to increase to $6.50 per barrel from $5.30 per barrel.

In the international market, the price of Brent increased by $5 per barrel to $83 from $78 per barrel on January 16. HSD also became costlier by about $2 per barrel to $97 from about $95 per barrel during the same period.

Currently, the government is imposing a higher rate of petroleum levy on petroleum products, up to Rs60 per litre. Therefore, the primary reason for higher oil prices in Pakistan is the higher taxes collected by the federal government to meet current expenditures.

The Russia-Ukraine conflict also contributed to higher oil prices in the international market, affecting domestic prices.