Prepare for another price increase after the recent jump of Rs. 9.66 per liter. Sources suggest that petrol prices may rise by Rs. 7-8 per liter, reaching a new rate of Rs. 297.42 per liter from the previous Rs. 289.41 per liter.

On the other hand, diesel prices could also go up by Rs. 1-2/L to Rs. 284.24/L from the previous rate of Rs. 282.24 per liter. In the last adjustment, diesel prices actually dropped by Rs. 3.32 per liter.

Reports indicate that the government has not increased the petroleum levy or implemented GST yet, so this price increase may happen independently of these measures. However, if these taxes are raised in the future, prices could skyrocket to unprecedented levels.

Motivation Behind the Increase

The upcoming hike is not solely due to the IMF’s recommendation to reintroduce an 18% general sales tax (GST) on petrol as a condition for the final tranche of its bailout package.

Factors such as prolonged currency devaluation and the tense geopolitical situation in the Middle East, particularly any potential conflict between Iran and Israel, are also impacting international oil prices.

GST & Petroleum Levy

There are indications that the government plans to raise the petroleum levy from Rs. 60 to Rs. 100. The Petroleum Development Levy has seen several adjustments in recent years, including significant increases in the fiscal year 2023.

Initially set at Rs. 20 per liter in July 2022, the petroleum levy on petrol was raised to Rs. 50 per liter in November 2022, and then to Rs. 60 per liter until September 2023.

Currently, the government imposes a development levy of Rs. 60 per liter on both petrol and diesel, which is the maximum allowed by law. Factors such as Pakistan State Oil’s needs, taxes, and global oil prices are considered in setting these prices.