Pakistan’s Finance Minister Ishaq Dar announced to increase petrol prices by a staggering Rs19.95 per liter, citing the rising commodity price in the global market. The petrol price hike is seen to further trigger inflation in the country at all levels.
The minister justified the decision, stating that it was made “in the national interest.” With the new prices coming into effect with immediate effect, the cost of High-Speed Diesel (HSD) was raised by Rs19.90 to reach Rs273.40 per liter, while the price of petrol was increased by Rs19.95 to reach Rs272.95 per liter.
| Product | Existing prices (since July 16, 2023) | New prices (from Aug 1, 2023) | Change |
| Petrol | Rs253 | Rs272.95 | Rs19.95 |
| Diesel | Rs253.50 | Rs273.40 | Rs19.90 |
Dar argued that the government was bound to follow the agreement with the International Monetary Fund (IMF). Any deviation from the deal would have adverse consequences for the country, Dar asserted, adding that the outgoing government made this decision in the broader interest of Pakistan.
“We all know that the international commitments we have with the International Monetary Fund (IMF) regarding the petroleum levy, if they weren’t there then we would have announced either partial adjustment or whatever the premier would have deemed appropriate to give a lower increase,” he said, “but everyone knows we have a standby agreement.”
Petroleum Levy
As per the stand-by agreement with the IMF, Pakistan’s government is required to raise the Petroleum Development Levy (PDL) from the current Rs 50 per liter to Rs 60. Additionally, the government must eliminate subsidies to reduce the fiscal deficit, which will result in market-driven prices, putting the public at the mercy of market fluctuations.
Last price review of the outgoing PML-N coalition government
Constitutionally, this is the final fortnightly price review of the outgoing PML-N coalition government, whose term ends on August 12. The government was reluctant to announce midnight on Monday (July 31) due to the potential political repercussions, considering the upcoming general elections in October or November. Finance Minister Dar stated that they explored various avenues to provide relief to the public while postponing the decision but ultimately found no room for that.
Electricity price hike
Recently, the government has also increased the electricity base price, following the energy sector reforms recommended by the IMF. These reforms aim to reduce circular debt and further minimize subsidies. However, the government assures that the decision will not affect consumers using up to 200 units, which constitutes over 65 percent of the total consumer base.
Sui Gas tariff raised
In addition to the recent fuel price hikes, the Oil and Gas Regulatory Authority (Ogra) has also raised the tariff for Sui Northern Gas by 50 percent and Sui Southern Gas by 42 percent on average. This package of increasing utility and fuel prices results in Sui Northern gas consumers paying an additional amount of Rs415.55 per MMBtu (Metric Million British Thermal Unit), while Sui Southern consumers face an increase of Rs417 per MMBtu.