Petrol price hike tied to end of IMF levy relief

PM secured two-month concession during war

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OGRA increased HSD and Petrol prices from March 01. PHOTO: PEXELS

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ISLAMABAD:

The recent increase in petroleum product prices has been attributed to the expiry of a temporary concession on the petroleum levy that Prime Minister Shehbaz Sharif had secured from the International Monetary Fund (IMF) during heightened tensions between Iran and the United States, according to senior government sources.

The sources said that during the Gulf crisis triggered by the Iran-US confrontation, PM Shehbaz personally contacted the IMF managing director and sought relief in the petroleum levy to shield consumers from a sharp increase in fuel prices.

According to the sources, the prime minister's special efforts resulted in the IMF granting Pakistan a two-month relaxation on the petroleum levy, allowing the government to avoid passing on the full burden of higher fuel costs to consumers during that period.

However, the two-month concession has now expired, requiring the government to restore the petroleum levy in line with its commitments under the IMF programme.

The sources said that following the expiry of the temporary relief, the government had to increase the petroleum levy on petroleum products, which consequently led to the latest increase in fuel prices.

The government on Friday announced higher prices for petroleum products, including an increase in the petroleum levy on petrol, with officials maintaining that the adjustment became necessary after the end of the IMF-approved concession.

The increase in the levy comes as Pakistan continues to implement revenue measures agreed with the IMF under its ongoing economic reform programme, under which the petroleum levy remains an important source of government revenue.

Jet fuel

The government has increased the price of jet fuel used by commercial airlines by Rs13.23 per litre following a rise in international oil prices, while also raising the price of kerosene and increasing the petroleum levy on petrol.

According to sources, the price of aviation turbine fuel (jet fuel) has been increased by Rs13.23 per litre, taking the new price to Rs251.02 per litre.

Sources said the increase was necessitated by a sudden surge in global crude oil prices, which pushed up the cost of jet fuel.

The revised price is expected to increase fuel costs for commercial airlines, as jet fuel is one of the major components of airline operating expenses.

Meanwhile, the government has also increased the price of kerosene by Rs11.19 per litre.

Following the increase, the new price of kerosene has been fixed at Rs242.33 per litre, compared with the previous rate of Rs231.14 per litre.

Sources further said the government has also increased the petroleum levy on petrol by Rs9.64 per litre.

With the latest increase, the petroleum levy on petrol has once again reached Rs80 per litre, up from the previous rate of Rs70.36 per litre, according to sources.