ISLAMABAD, April 30: The government on Wednesday announced an increase in the prices of petrol and diesel by Rs3 a litre.

The prices of petrol, HOBC, high speed diesel and light diesel oil were raised for the 15-day period ending on May 15.

Wednesday’s was the second increase in petroleum prices by the new government and the fourth during the past two months, which have pushed the inflation rate to a record high level of over 14 per cent with food inflation at around 20 per cent.

The price of crude oil in the international market recently jumped to $120 per barrel.

Wednesday’s decision will raise the price of petrol to Rs69.03 per litre from Rs66.03 and that of diesel to Rs50.28 from Rs47.28. The kerosene price will remain unchanged at Rs49.02 per litre.

Analysts said the immediate impact of the hike would be a substantial increase in transport fares.

The increase in international prices of oil will also push the country’s import bill to the highest ever level of around $36 billion by the end of June. Pakistan has imported petroleum products worth $7.416 billion during the first nine months of the current fiscal year against $5.227 billion over the same period last year, indicating a growth of 41 per cent.

The import bill for oil is expected to increase to $15 billion.

The country’s trade deficit has ballooned to $14 billion in the first nine months of the fiscal year and may cross $20 billion by the end of June.

An official of the finance ministry said that the government was still giving subsidy, particularly on kerosene and diesel. The total amount of subsidy in the oil sector during the financial year is expected to be Rs153 billion.

However, the increase in oil prices is also likely to increase the revenue collection in the sector to Rs180 billion.

Experts said the government would have to consider other options to check the impact of international crude oil prices on domestic consumers, including issuing of oil bonds, requesting supply at concessional rates from the Saudi Arabian government and discouraging private vehicles.

Speaking on a point of order in the Senate, Finance Minister Mohammad Ishaq Dar said kerosene price would not be increased in view of its extensive use by the poor.

He said the oil prices would be increased in phases.

However, the minister said that if the house unanimously opposed any further increase the decision would be honoured by the government, but it would seriously affect development projects.