Finance Secretary Waqar Masood Khan told Dawn on telephone that the price of diesel had been increased by 13 per cent and that of petrol by about 10 per cent with immediate effect. — File Photo

ISLAMABAD: Despite a lot of haggling with the Muttahida Qaumi Movement (MQM), the government on Thursday raised petroleum prices by up to 13 per cent to pass on the full impact of international market to consumers. Finance Secretary Waqar Masood Khan told Dawn on telephone that the price of diesel had been increased by 13 per cent and that of petrol by about 10 per cent with immediate effect.

He, however, said the prime minister had directed the finance minister to consider measures to provide relief to poor consumers like for those of rickshaws and motorcycles.

Informed sources said the ministries of petroleum and finance and the Oil and Gas Regulatory Authority (Ogra) had advised the government to raise the prices of petroleum products by 10-12 per cent.

The impact of March prices in the international market have been fully passed on to the consumer.

The sources said the government had absorbed a loss of Rs35 billion over the past four months.

This is the single biggest surge in oil prices since July 2008 and is expected to generate about Rs11 billion in revenue for the government. The recent instability in the Middle East has led to a recent hike in oil prices.

Prime Minister Yousuf Raza Gilani, who also holds the petroleum portfolio, had been informed that in case the prices were not raised, the government would lose Rs9.2 billion in petroleum levy and another Rs2 billion in General Sales Tax collection.

The two sides remained in telephonic contact till late in the night, but the government’s team persuaded the prime minister to increase the prices to maintain cordial relations with international lenders.

Informed sources said since the MQM was opposing the oil price hike, Prime Minister Yousuf Raza Gilani tried to take its leadership into confidence over the difficulties being faced by the government in containing fiscal deficit. But the Muttahida stuck to its position.

According to the notification, the prices of petrol will be pushed up by Rs6.98 per litre (from Rs76.58 to Rs83.56), while High Octane Blending Component (HOBC) prices by Rs7.16 per litre (from Rs90.96 per liter to Rs98.12).

Both these increments are 9.1 per cent and 7.9 per cent respectively.

Similarly, the ex-depot sale price of kerosene has been increased by a massive Rs9.65per litre (from Rs74.45 to Rs84.10) while the price of light diesel oil (LDO) has been jacked up Rs9.07 per litre (from Rs69.91 to Rs78.98). These are also increments of 13 per cent each.

The prices of high speed diesel (HSD) have been raised by Rs10.66 per litre (from Rs82.22 to Rs92.89) or 13 per cent.

The increase in petroleum prices is expected to multiply inflation and the cost of industrial production.