Pakistan on Monday night notified a significant increase in fuel prices—the second time in June—citing global market volatility and the depreciating rupee.
In a notification, the Finance Division hiked the price of high-speed diesel by Rs. 10.39, bringing it to Rs. 272.98/liter. It also raised the price of petrol by Rs. 8.36 to Rs. 266.79/liter on recommendations of the Oil and Gas Regulatory Authority (OGRA) and relevant ministries.
The revised prices came into effect on July 1 and would remain in place for the next two weeks.
Authorities have attributed the price hike to a surge in international crude oil prices following the conflict between Iran and Israel, as well as ongoing fluctuations in the value of the local currency. “The adjustments reflect prevailing global trends and are necessary to ensure fuel supply stability,” read a statement issued by the government.
This is the second consecutive fuel price increase announced by the government. On June 16, the government raised petrol prices by Rs. 4.80/liter and diesel by Rs. 7.95/liter in a similar adjustment. Prime Minister Shehbaz Sharif denied the public earlier fuel price adjustments that would have reduced consumer prices by diverting the “savings” to fund infrastructure projects in Balochistan. He similarly utilized another chance to reduce fuel prices amidst a global downturn to temporarily reduce electricity bills.
Fuel prices in Pakistan are reviewed every two weeks and are directly linked to changes in international benchmarks and exchange rates—though in recent times the changes are only reflected for consumers if prices increase while they do not receive any similar relief when global prices decline. The government is also charging around Rs. 100/liter tax on petrol and diesel, including the freshly imposed Rs. 2.5/liter carbon levy and roughly Rs. 78/liter petroleum development levy.
The boost to diesel prices risks triggering inflationary pressures, as it is mostly used in heavy transport vehicles, trains and agricultural vehicles, which have a trickle-down effect on the prices of edibles. Transport fares also tend to spike after every fuel price increase, though there is seldom a similar reduction when prices go down.
Petrol price hikes tend to impact the middle classes the most, as the fuel is widely used for private transport, small vehicles, rickshaws and two-wheelers.