The anticipated increase in petrol and high-speed diesel (HSD) prices for the upcoming fortnight, starting from February 16, is expected to range from Rs4 to Rs11 per litre due to higher international prices and import premiums. This surge in prices is projected to neutralize the impact of a slight exchange rate gain.
According to reliable sources, the prices of both key petroleum products, petrol and HSD, have risen in the global market during the current fortnight. Pakistan State Oil (PSO) has also incurred higher import premiums for petrol, despite a minor appreciation of the rupee against the US dollar. Consequently, HSD prices are estimated to increase by Rs9 to Rs11 per litre, while petrol prices are anticipated to rise by approximately Rs4 per litre, subject to the final exchange rate calculations. There is also an expectation of a slight increase in the prices of kerosene and light diesel oil.
Officials have reported a rise in petrol prices by about $1.20 per barrel to $89.9 from $88.7 per barrel over the past two weeks, with HSD becoming costlier by approximately $3.5 per barrel, reaching $101.82 from about $98.4. Meanwhile, the rupee has strengthened by about 40 paise against the dollar, settling at Rs279.7 from a little over Rs280 in the first half of February. The import premiums paid by PSO for petrol have slightly increased from $9.5 to $9.7 per barrel, while remaining unchanged for HSD at $6.5 per barrel.
The government has already attained the maximum permissible limit of Rs60 per litre petroleum levy on both petrol and HSD under the law. With a budget target of collecting Rs869 billion as petroleum levy during the current fiscal year, the government has already collected about Rs475 billion in the first half (July-December), gradually increasing the levy per litre. The revised target for the year-end has been set at Rs920 billion.
Petrol, predominantly used in private transport, small vehicles, rickshaws, and two-wheelers, directly impacts the budgets of the middle- and lower-middle class. Conversely, the price of HSD is considered highly inflationary as it is primarily used in heavy transport vehicles, trains, and agricultural engines, thereby influencing the prices of essential commodities, including vegetables.
Currently, the government imposes approximately Rs82 per litre tax on both petrol and HSD. While the general sales tax (GST) is zero on all petroleum products, the government levies Rs60 per litre petroleum development levy (PDL) on both products. Additionally, Rs50 per litre is charged on high-octane blending components and 95RON petrol, with a customs duty of about Rs17-20 per litre on petrol and HSD.
Petrol and HSD remain significant revenue generators, with monthly sales volumes of about 700,000-800,000 tonnes per month compared to just 10,000 tonnes of kerosene.
