The government has recently announced significant hikes in fuel prices, with petrol seeing a significant increase of Rs 9.99 per liter, pushing the new price to Rs 275.60.
Concurrently, high-speed diesel prices have surged by Rs 6.18 per liter, now standing at Rs 283.63. These revised rates will come into effect at midnight and are scheduled to remain in force until July 31st.
The government has announced that there will be no changes in the applicable duties and taxes, confirming they will remain at their current levels. This decision comes amidst expectations of significant increases in the prices of petrol and high-speed diesel (HSD), anticipated to rise by more than Rs7.60 and Rs3.50 per liter respectively, due to elevated global oil prices.
Sources indicate that over the past fortnight, international market prices for petrol and HSD have climbed by approximately $4.4 and $2 per barrel, respectively. In response to these dynamics, the government has raised the maximum limit of the petroleum development levy (PDL) to Rs70 per liter through the Finance Bill. This adjustment aims to achieve a collection target of Rs1.28 trillion in the current fiscal year, up from Rs960 billion collected in the previous year and significantly exceeding the budget target of Rs869 billion by nearly Rs91 billion.
During the same period, import premiums for both petrol and HSD have remained stable at $9.60 and $6.50 per barrel respectively, while the Pakistani rupee has depreciated by approximately 17 paise against the US dollar.
Currently, the government imposes taxes of about Rs77 per liter on both petrol and HSD. Although general sales tax rates are zero on all petroleum products, a PDL of Rs60 per liter is applied to mitigate the impact on the masses. Additionally, there is a fixed customs duty of about Rs17 per liter on both locally produced and imported petrol and HSD.
The prices of petroleum and electricity have been identified as major drivers of inflation. Petrol is predominantly used in private transport, small vehicles, rickshaws, and motorcycles. Conversely, a diesel price hike is considered inflationary, especially affecting heavy transport vehicles and contributing to increased costs for essential commodities such as vegetables.
