February, 23, 2024
Government Raises Fuel & LPG Prices Amid Global Market Trends

Government Raises Fuel & LPG Prices Amid Global Market Trends

Infostani International: The caretaker government has announced a surge in fuel prices for the next two weeks, with petrol seeing a 5% increase at Rs13.55 per litre and high-speed diesel up by Rs2.75 per litre. The Ministry of Finance attributes the change to higher international market rates and import premiums based on Ogra’s recommendations. Liquefied petroleum gas (LPG) prices also rose by Rs1.16 per kilogram for February. These adjustments are expected to impact various sectors, including private transport and agriculture, with broader implications for the economy.

Government Announces Significant Fuel Price Hikes and LPG Adjustments for February

On Wednesday, the caretaker government announced an increase in the per-litre price of petrol by Rs13.55 and high-speed diesel (HSD) by Rs2.75 for the next fortnight ending Feb 15. The adjustment was made in response to higher international market and import premiums, as recommended by the Oil and Gas Regulatory Authority (Ogra).

The Ministry of Finance, in a late-night announcement, revealed that the new ex-depot price of petrol would be Rs272.89 per litre, reflecting a Rs13.55 increase, resulting in a retail price at the pump well above Rs273.50 per litre. This 5% hike directly affects private transport, small vehicles, rickshaws, and two-wheelers, impacting the budgets of the middle- and lower-middle classes.

Simultaneously, the price of high-speed diesel rose by Rs2.75, setting the new ex-depot price at Rs278.96 per litre. However, the retail price at pumps would surpass Rs280. HSD is predominantly used in heavy transport vehicles, trains, and agricultural engines, contributing to inflation and affecting the prices of vegetables and other consumables.

Government Raises Fuel & LPG Prices Amid Global Market Trends

Government Withholds Prices of Kerosene and Light Diesel Oil (LDO) Amid Concerns of Misuse and Industrial Impact

The government did not disclose the prices of kerosene and light diesel oil (LDO). Kerosene is often misused for illicit activities and, to some extent, for lighting in remote areas, while LDO is consumed by flour mills and a couple of power plants.

Officials explained that international prices for both major petroleum products had increased over the past fortnight, leading to higher import premiums for Pakistan State Oil (PSO), despite the rupee gaining against the US dollar.

Fuel Price Dynamics and Exchange Rate Impact: Changes in Petrol, Diesel, and LPG Prices Explained

During the same period, the price of petrol decreased by almost $3 per barrel to $86.5, while HSD became costlier by about $1.85 per barrel to $97.5. Although the rupee appreciated by about Rs1.5 against the dollar in the first half of January, the PSO’s import premiums for both products rose.

In addition to the petroleum price adjustments, the government increased the price of liquefied petroleum gas (LPG) by Rs1.16 per kilogram for February. Ogra attributed this increase to an exchange rate loss, as the international price of LPG, linked with Saudi Aramco CP and the US dollar exchange rate, experienced a 1.6% rise. The LPG consumer price increased by Rs13.76 per 11.8 kg cylinder (0.45%) due to this fluctuation.