ISLAMABAD: The prices of petrol and high-speed diesel (HSD) are estimated to go up by Rs4-11 per litre for the next fortnight (Feb 16) owing to higher international prices and import premiums, neutralising an impact of minor exchange rate gain.

Informed sources said the prices of both major petroleum products — petrol and HSD — had increased in the international market over the current fortnight and the Pakistan State Oil (PSO) also had to pay higher import premiums on petrol even though the rupee had gained against the US dollar. As a result, the price of HSD will go up by Rs9-11 per litre and that of petrol will rise by about Rs4 per litre, depending on the final exchange rate calculation. The prices of kerosene and light diesel oil are also expected to slightly increase.

Officials said the price of petrol had gone up by about $1.20 per barrel to $89.9 from $88.7 per barrel over the last two weeks while HSD had become costlier by about $3.5 per barrel — to $101.82 from about $98.4. The rupee on the other hand gained by about 40 paise against the dollar to Rs279.7 from a little over Rs280 in the first half of February. The premium paid by PSO for securing product cargoes went up slightly for petrol from $9.5 to $9.7 per barrel. It remained unchanged for HSD at $6.5 per barrel.

The government has already achieved Rs60 per litre petroleum levy — the maximum permissible limit under the law — on both petrol and HSD. The government had set a budget target to collect Rs869bn as petroleum levy on petroleum products during the current fiscal year under the commitments made with the International Monetary Fund (IMF). It has already collected about Rs475bn in the first half (July-December) although the per litre levy was gradually increased.

The government is expected to mop up about Rs970bn by the end of the year although the revised target has now been set at Rs920bn by end-June.

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

On the other hand, HSD price is considered highly inflationary as it is mostly used in heavy transport vehicles, trains and agricultural engines like trucks, buses, tractors, tube wells and threshers, and particularly adds to the prices of vegetables and other eatables.

At present, the government is charging about Rs82 per litre tax on both petrol and HSD. Although the general sales tax (GST) is zero on all petroleum products the government is charging Rs60 per litre PDL on both products. On the other hand, it charges Rs50 per litre on high octane blending components and 95RON petrol. The government is also charging about Rs17-20 per litre customs duty on petrol and HSD.

Petrol and HSD are the major revenue spinners with their monthly sales of about 700,000-800,000 tonnes per month compared to just 10,000 tonnes of kerosene.

Published in Dawn, February 15th, 2024