The federal government, late on Sunday night, increased the prices of both petrol and diesel by Rs. 4.8/liter and Rs. 7.95/liter, respectively, passing onto consumers anticipated hikes to global fuel rates in the aftermath of the Iran-Israel conflict.
The eagerness to boost fuel rates stands in stark contrast to the government’s refusal to pass on similar benefits to the public when global prices decline. Last month, Prime Minister Shehbaz Sharif broke a vow he had made to the nation in 2022, when he claimed the government would pass onto the public the benefit of any decline in global oil prices.
Instead, he refused to pass on an anticipated reduction in fuel rates by claiming the difference would be used to temporarily reduce electricity prices. He then refused to pass on further benefits two weeks later by claiming the “excess” funds would be used to fund infrastructure projects in Balochistan. At the same time, the government has increased the petroleum development levy (PDL) to nearly Rs. 80/liter, indicating the PMLN-led government’s indifference toward the inflationary impact of every fuel hike.
In its latest notification, the Finance Division said the new prices had been determined “based on the recommendations of OGRA [Oil and Gas Regulatory Authority] and the relevant ministries.” It said high-speed diesel, whose prices directly impact transportation costs and play a major role in commodity pricing, would now cost Rs. 262.59/liter against the earlier Rs. 254.64/liter.
Similarly, petrol now costs Rs. 258.43/liter against the previous Rs. 253.63/liter.
This week’s increase could prove precursor to significantly higher fuel prices in the coming months if the conflict between Iran and Israel continues for several weeks or even months. According to local media, the conflict has already triggered shortages of fuel in Balochistan, as the supply of Iranian oil through the two countries’ border has dried up. However, the Balochistan government has denied this, maintaining the warnings of a shortage are a “ploy” to allow the use of smuggled Iranian fuel.