Dar blames fuel price hike on global trend

Published August 2, 2023
Finance Minister Ishaq Dar announced an increase of up to Rs20 per litre in fuel prices for the next fortnight on Tuesday. — DawnNewsTV
Finance Minister Ishaq Dar announced an increase of up to Rs20 per litre in fuel prices for the next fortnight on Tuesday. — DawnNewsTV

ISLAMABAD: After a delay of about 11 hours, the government on Tuesday announced an increase of up to Rs20 per litre in fuel prices for the next fortnight in line with the international market.

The hike in the prices of petroleum products came as official data showed consumer inflation was 28.3 per cent in July, which would also have a lag effect on general prices in the country during August. The government has already increased the price of liquefied petroleum gas and the electricity tariff by up to 17pc and 26pc, respectively.

In a recorded video statement, Finance Minister Ishaq Dar said the announcement for the fuel price increase was delayed because of government efforts to find a way to minimise the hike for consumers, but international prices of both petrol and high-speed diesel (HSD) had gone up significantly over the past fortnight.

He also said the HSD price in the international market had increased from $96.26 per barrel on July 16 to $111.46 on July 31, while petrol had gone up to $97.39 per barrel from $89.14, showing an increase of about 16pc and 10pc, respectively.

Announces increase of Rs20 per litre in rates of petrol, high-speed diesel

He said that because of the international commitments under the International Monetary Fund’s loan programme, the government had no other option but to pass on the impact to consumers.

Under the decision, the ex-depot price of HSD has been fixed at Rs273.40 per litre for the next fortnight compared to Rs253 previously, up by Rs19.90 or 7.85pc.

An increase in the price of high-speed diesel is considered highly inflationary, as the fuel is mostly used in heavy transport vehicles, trains and agricultural engines like trucks, buses, tractors, tube-wells and threshers. An expensive HSD particularly adds to the prices of vegetables and other eatables.

Likewise, the ex-depot price of petrol was fixed at Rs272.95 per litre for the next fortnight compared to Rs253, showing an increase of Rs19.95 or 7.9pc.

The product is mostly used in private transport, small vehicles, rickshaws and two-wheelers and has a direct bearing on the budget of middle- and lower-middle classes.

The minister did not announce any change in the prices of kerosene and light diesel oil, but the Ministry of Energy notified an increase of Rs20 per litre (11.7pc) in the price of kerosene, taking it to Rs192.38 per litre. Kerosene is mostly used by unscrupulous elements for mixing it with petrol.

He said the cost of petroleum products in Pakistan was directly linked to the international prices of these products. “Therefore, the increase in domestic prices is inevitable and beyond the control of the government of Pakistan”, he said in a written statement.

At present, the GST is zero on all petroleum products, but the government is charging Rs55 per litre petroleum development levy (PDL) on petrol and Rs50 per litre each on HSD and high-octane blending component and 95 RON petrol. The government is also charging about Rs18-22 per litre customs duty on petrol and HSD.

Petrol and high-speed diesel are major revenue spinners for the government, with monthly sales of about 700,000 to 800,000 tonnes compared to just 10,000 tonnes of monthly demand for kerosene.

Published in Dawn, August 2nd, 2023

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