Finance Minister Ishaq Dar on Wednesday announced an increase of Rs2 in petrol prices, DawnNews reported.

"Oil and Gas Regulatory Authority (Ogra) had proposed an increase of Rs6.24 in price of petrol, however, the price will only be increased by Rs2," said Dar while addressing a news conference in Islamabad.

"The government will bear the remaining expense of Rs4 billion," he added.

The prices of kerosene oil and light diesel oil have been kept unchanged, while petrol and high speed diesel prices have been increased.

"Prices of petroleum products were not increased in the last seven months and federal government has again decided not increase the prices of kerosene oil and light diesel," he said.

While talking about smuggling of currency and gold, Ishaq Dar said that action will be taken against the people involved in such illegal activity and their supporters.

Ogra had earlier proposed that the prices of all petroleum products (except LDO) had gone up in the international market in November and needed to be passed on to the consumers in December.

In its working paper, Ogra based on existing high tax rates calculated 6.2pc increase in the price of petrol, 7.5pc in high-speed diesel, 6.5pc in kerosene and 9.4pc in the price of HOBC.

Ogra had forwarded its working paper to government on the basis of existing tax rates under instructions from Finance Minister Ishaq Dar.

Based on existing tax rates and PSO purchases from international market, Ogra worked out the ex-depot price of petrol at Rs68.28 per litre for December against the current Rs64.27, an increase of Rs4.01 (6.2pc).

The regulator estimated the ex-depot sale price of HSD to go up by Rs5.42 per litre (7.5pc) to Rs77.94 from the existing Rs72.52.

It had also worked out an increase of Rs6.82 (9.4pc) in the ex-depot price of HOBC at Rs79.54 per litre.

Likewise, the Ogra calculated the ex-depot price of kerosene to increase by Rs2.81 per litre (6.5pc) to Rs46.06 from Rs43.25.

Also, it worked out 13 paisa per litre (0.3pc) decline in ex-depot sale price of light diesel oil at Rs43.34 against the existing Rs43.21.

Petrol and high speed diesel are the two major products that generate most of revenue in oil sector. The HSD sales across the country are average 600,000 tonnes per month against monthly consumption of around 400,000 tonnes of petrol while kerosene sales are less than 10,000 tonnes per month.