Petrol and diesel prices were increased by Rs6 per litre while kerosene and light diesel oil (LDO) were jacked up by Rs3 per litre with immediate effect, according to an official announcement.
With the decision, the ex-depot price of high speed diesel (HSD) was set at Rs117.43 per litre — the highest since July 2018 — instead of existing rate of Rs111.43 per litre, up by 5.36pc.
Likewise, the ex-depot price of motor spirit (petrol) was fixed at Rs98.89 per litre — also a nine-month high — instead of current rate of Rs92.89, showing an increase of 6.45pc.
The ex-depot price of kerosene oil was increased to Rs89.31 per litre — the highest since October 2014 — from Rs86.31 per litre, indicating an increase of almost 3.5pc.
Govt increases rates of petrol, HSD to Rs98.89 and Rs117.43 for April
The ex-depot price of LDO was increased to Rs80.54 per litre — a five-month high — from the previous rate of Rs77.54 per litre, up by 3.9pc.
However, the government did not pass on the full price hike calculated by the Oil & Gas Regulatory Authority (Ogra) last week and reduced tax rates to minimise political backlash.
Based on import parity price of Pakistan State Oil (PSO) for purchases in March, Ogra had worked out about Rs11.17 increase in the price of HSD per litre, Rs11.91.71 hike in petrol price, Rs6.65 rise in kerosene price and Rs6.49 increase in LDO price.
Crude price (Brent) had increased by less than 2pc over the last month from $66.57 on Feb 28 to $67.86 per barrel on March 28.
The government had already increased general sales tax (GST) on all petroleum products to standard rate of 17pc across the board to generate additional revenues. Until January 2019, the government had been charging 0.5pc GST on LDO, 2pc on kerosene, 8pc on petrol and 13pc on HSD.
Besides the 17pc GST, the government had more than doubled the rate of petroleum levy on HSD in recent months to Rs18 per litre instead of Rs8 per litre, while levy on petrol had also been increased by 40pc to Rs14 per litre instead of Rs10 per litre.
Over the last two months, the government started increasing petroleum levy rates to partially recoup a major revenue shortfall faced by the Federal Board of Revenue (FBR). The petroleum levy remains in the federal kitty unlike GST that goes to the divisible pool taxes and thus about 57pc share is taken by the provinces.
Petrol and HSD are two major products that generate most of the revenue for government because of their massive and yet growing consumption in the country. Total HSD sales are touching 900,000 tonnes per month against monthly consumption of around 700,000 tonnes of petrol. The sales of kerosene oil and LDO are generally less than 10,000 tonnes per month.
The petroleum prices have been on the rise since early 2017, barring only a couple of times when they were reduced.
For the past two weeks, the international benchmark Brent prices have been inching up and the government has also been mopping up tax rates in run up to finalisation of an IMF-assisted stabilisation programme.
The government has already announced that it will gradually increase electricity and gas rates over the next few months.