The PML-N-led coalition government has initiated the fiscal year 2024-25 by raising petrol and high-speed diesel (HSD) prices by Rs7.45 and Rs9.56 per litre, respectively, for the upcoming fortnight. This adjustment follows a late-night announcement by the Ministry of Finance, citing increasing trends in international petroleum prices over the last fortnight. The Oil and Gas Regulatory Authority (Ogra) calculated the new consumer prices based on these global market fluctuations, while tax and duty rates on petroleum products remain unchanged.
New petrol and diesel prices
From July 1 to 15, the ex-depot price of petrol will rise to Rs265.61 per litre, up from Rs258.16, marking a 2.9 per cent increase. Retail prices will exceed Rs266 per litre. Petrol, predominantly used in private transport, small vehicles, rickshaws, and two-wheelers, significantly affects the budgets of middle and lower-middle-class households.
Similarly, the ex-depot price of HSD will increase to Rs277.45 per litre from Rs267.89, reflecting a 3.6pc rise. HSD is crucial for the transport sector, powering heavy vehicles, trains, and agricultural machinery. Its price hike is likely to escalate inflation, particularly in the costs of vegetables and other essential goods, contributing to an estimated 13.5pc inflation rate in June, up from 11.8pc in May.
Petroleum levy and revenue targets
Finance Minister, in a statement preceding the price hike announcement, assured that the petroleum levy would remain unchanged, despite its budget ceiling being raised to Rs70 per litre from Rs60 to allow future adjustments. The government aims to collect Rs1.28 trillion from petroleum in the upcoming fiscal year, a significant increase from the Rs960 billion estimated for the current year and higher than the Rs869 billion budget target.
Global market impact
Officials noted that international prices of petrol and HSD increased by approximately $4.4 and $5.5 per barrel, respectively, over the last fortnight. Concurrently, the rupee depreciated by about 17 paise against the dollar, further influencing domestic price adjustments.
Historical price trends
Since May 1, petrol and HSD prices have generally declined due to a slump in the international market. On April 30, petrol prices dropped by nearly Rs35 to about Rs259 per litre, and HSD prices decreased by about Rs22 to Rs268 per litre in the second half of April.
The new adjustments reflect the government’s response to global market conditions and its efforts to manage the domestic economic impact, particularly on the transport sector and inflation.