Petrol price in Pakistan is expected to observe another hike for the next fortnight. The government increased the petrol price by Rs. 14.91 per liter on August 31, 2023. After the last hike, the new petrol price in Pakistan is Rs. 305.36 compared to Rs. 290.45. Meanwhile, the high-speed diesel price (HSD) saw a jump of Rs. 18.44/liter, taking the price to Rs. 311.84 from Rs. 293.40. Furthermore, the petroleum development levy (PDL) was increased by Rs. 5/liter for petrol, taking it to Rs. 60/liter under the conditions of International Monetary Fund (IMF).

Next Hike in Petrol Price in Pakistan 

With no respite in increasing energy rates, currency depreciation, and higher international oil prices, the country is looking right into the eyes of another hike in petrol price in Pakistan. As per media reports and sources, the prices of both major petroleum products- petrol and HSD- will see another jump in rates.

The sources claimed that the petrol price in Pakistan could go up by Rs. 10-14/liter, while HSD price can see a jump of Rs. 14-15/liter on September 15 for the next fortnight. Meanwhile, kerosene oil price can go up to Rs. 10/liter, based on current tax rates and import parity price.

In the first ten days of September, the rupee depreciated by Rs. 4.5 against the US dollar, going from Rs. 299 to Rs. 304 before coming back to Rs. 300, but in the meanwhile, benchmark global prices went over $92 per barrel last week compared to $88 in the first week of September, nullifying whatever little space the exchange rate might have created.

Parity Price 

According to the sources, the import parity price of petrol, diesel, and kerosene oil has increased by Rs. 13, Rs. 14, and Rs. 10/liter, respectively, since September 1. However, the sale prices are estimated to go up by Rs. 13, Rs. 16, and Rs 10 per liter, as per product imports by Pakistan State Oil (PSO). In this scenario, petrol and diesel prices are estimated to cross Rs. 320 and Rs. 325/liter, respectively.

The local transport sector mainly uses HSD, and its price is directly linked with the inflation rate because it is used in heavy transport vehicles, trains, buses, and agricultural engines like tractors, tube wells, threshers, and even trucks, thus explicitly adding to the price of vegetables and other eatables.

On the other hand, petrol is used in private transport, passenger cars, rickshaws, and two-wheelers, directly impacting the monthly expenditure of middle and low-middle-class families.

The increase in petrol price in Pakistan has come on the heels of an over 27.4% inflation rate last month that would also significantly affect general prices in the country during the coming days and weeks.

Taxes & Duties on Petroleum Products 

Currently, these products have zero General Sales Tax (GST); however, as mentioned earlier, the government is charging Rs. 60/liter PDL on petrol and Rs. 50/liter on HSD. Furthermore, the government is charging about Rs. 18 to Rs. 22/liter customs duty on petrol and HSD. These two petroleum products are major revenue sources for the government, with their monthly sales revolving around 700,000 – 800,000 tons per month compared to just 10,000 tons of kerosene oil monthly.

Profit Margins for OMCs

Another news related to petrol price in Pakistan is that for OMCs, the profit margins for fuel and diesel will increase by Rs1.87 per liter. In the first phase, on September 15, the sale margin for OMCs will see an increase of Rs0.47 per liter. This is a significant jump that will undoubtedly affect the costs incurred by OMCs, which are likely to be passed on to the consumers.

Petrol and diesel traders are also set to see an increase in their profit margins. A Rs1.64 margin increase has been permitted for these traders, but similar to OMCs, this increase will be phased in. On September 15, consumers can expect a Rs0.41 per liter increase for dealers in the first phase.

What is your take on the expected increase in petrol price in Pakistan? Please share your thoughts in the comments section.