The interim government in Pakistan poised to raise fuel prices tonight, responding to a surge in global oil prices as demand recovers. Insiders predict a 2% petrol price rise, making it Rs292.33 per litre. Diesel will cost Rs2 more, at Rs277.62 per litre.
Light diesel oil and kerosene oil are not exempt from this price adjustment, with increases of Rs0.80 and Rs0.70 per litre respectively.
In Pakistan, fuel prices revised bi-monthly, aligning them with global oil price trends and the rupee-dollar exchange rate. The Pakistani Rupee has remained stable recently.
The new prices, to announce by the government tonight, will be effective from March 1.
Fuel prices are set based on Pakistan State Oil’s expected consumption, supply costs, and tax targets.
Over the past fortnight, the government raised fuel prices by Rs8.37 and Rs2.73 per litre for petrol and diesel respectively, in response to a global oil price spike.
In the initial two months of 2024, geopolitical tensions in the Middle East and concerns over dwindling supplies contributed to a nearly 10% increase in crude oil prices. Supply issues in the region added to these concerns.
Pakistan imports about 85% of its oil requirements. The country has been grappling with a balance of payments issue and soaring inflation, which stood at 28.3% in January.
Last July, the government got a $3 billion IMF loan for economic stability. The deal required tax increases, higher energy costs, and a market-based exchange rate.
The rise in petrol prices will inevitably lead to increased living and transportation costs. In January, the country saw a 4% year-on-year decrease in petroleum product sales.
The primary reason for this decline reduced petrol and diesel sales, as consumers cut back on spending in response to the slowing economy.
