Massive Hike in Petroleum Prices On the 15th of September 2023 night. The caretaker government pushed through another hike in petrol prices by Rs26.02 per litre and high-speed diesel by Rs17.34 per litre
The increase brings the price of petrol to a new historical high i.e. Rs331.38 per litre. While high-speed diesel is Rs329.18 per litre.
— Ministry of Finance (@FinMinistryPak) September 15, 2023
It was added that the decision was taken owing to the increasing trend of petroleum prices in the international market.
No revision in the rates of kerosene or light diesel oil.
The price increase is the 2nd time by the caretaker government in the month of Sep-23. The first was on Sept 1, when they raised fuel prices by up to Rs18 per litre. During August same government increased the petroleum prices.
Petrol prices increased on 1st September 2023
Small factors behind this petrol hike in international oil prices. The main factors are existing tax rates and import rates mainly due to currency value fluctuations.
Price increase was expected
The rupee initially devalued by Rs4.5 against the dollar in the first 10 days of the current fortnight (from Rs299 to Rs304) before coming below Rs300. Meanwhile, benchmark international Brent prices went over $92 per barrel on Wednesday against $88 in the first week of September, thus cancelling out whatever little space the exchange rate might have created.
The government has also passed on to consumers about 88 paise per litre. This is the impact of the increase in sale margins for petroleum dealers and marketing companies. This increase was already approved by the Economic Coordination Committee of the cabinet last week.
Most of the transport sector runs on HSD. Its 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 also use HSD. So, this will particularly add to the prices of vegetables and other eatables.
On the other hand, petrol is mostly used in private transport, small vehicles, rickshaws and two-wheelers and directly affects the budget of the middle and lower middle class.
At present GST is zero on all petroleum products. The government is charging Rs60 per litre petroleum development levy on petrol and Rs50 each on HSD and high octane blending component and 95RON petrol. The government is also charging about Rs18 to Rs22 per litre customs duty on petrol and HSD.