ISLAMABAD: In compliance with recommendations received from the Oil & Gas Regulatory Authority (Ogra), the Petroleum Division raised the ex-depot rates for petroleum products from August 18 after postponing the scheduled adjustment date by three days over the weekend. The increase of Rs5.77 per litre in petrol prices was among the highest increases recorded since the adoption of the daily pricing regime.
The petrol price per liter was revised higher by Rs5.77, up from Rs325.43 to Rs331.20. However, the hike in the high-speed diesel (HSD) price per liter witnessed an even greater increase of Rs6.47, taking the total cost up from Rs383.95 to Rs390.42 per liter. The HSD adjustment is expected to have a greater impact due to its higher magnitude relative to the petrol adjustment.
In addition to the Rs5.77 rise in petrol prices, there is an increment of Rs1/litre on PL (petrol) as well. While the PL rate on HSD was previously set at Rs77.28 per litre, now it stands at Rs78.28 per litre. On the other hand, the PL rate for petrol remains unchanged at Rs80 per litre.
The customs duty levied on petrol stood at Rs21 per litre, up from no changes previously witnessed, while HSD was taxed at the same level of Rs15.68 per litre. The Climate Support Levy remained stable at Rs5 per litre for both fuels. Secondary charges imposed by Oil Marketing Companies and dealers stood steady at Rs7.87 per litre and Rs8.64 per litre, respectively, for both fuels. No adjustments in these secondary charges imply that the price increment is solely attributed to the ex-depot price increase and the increase in the levy rate of diesel fuel.
Government Adviser Defends the Petrol Price Increase
Khurram Shehzad, Adviser to the Finance Minister, has stated in a tweet defending the gradual imposition of higher taxes on HSD that such a move will simply bring about the pre-planned rate of taxation on the petroleum levy instead of introducing any fresh levy, thereby explaining that it was always envisaged as a gradual increase in the levy rather than a sudden imposition.
ALSO READ: Govt Cuts Petrol Price by Rs2.20, Diesel by Rs1.50 for Next 3 Days
The announcement comes against the backdrop of an upcoming evaluation of Pakistan’s Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) programs, scheduled to be undertaken by the IMF mission next month. The increase in petrol prices by Rs5.77 per liter and the corresponding rise in diesel duty will now be evaluated against Pakistan’s commitments under its IMF-sponsored programs.
The current daily pricing policy implemented in Pakistan involves setting fuel prices based on changes in foreign currencies and a seven-day moving average of the trends seen in Singapore Platts. The adoption of the daily pricing approach indicates that fuel price changes in Pakistan happen relatively faster due to changes in global markets. In other words, the new method adopted by Ogra makes changes to fuel prices a routine practice.