File photo. Asif Hassan—AFP
The interim government on Thursday notified a massive increase to fuel prices for the next fortnight, raising the tariff of petrol by Rs. 14.91/liter and high-speed diesel by Rs. 18.44/liter.
“Owing to the increasing trend of petroleum prices in the international market and exchange rate variations, the government has decided to revise the existing consumer prices of petroleum products,’ read a notification issued by the Finance Division. Under the revised prices, the tariff for petrol has increased from Rs. 290.45/liter to Rs. 305.36/liter, while that of diesel has ballooned from Rs. 293.4/liter to Rs. 311.84/liter. This is the first time in Pakistan’s history that the price of fuel has climbed past Rs. 300. The new prices include a petroleum development levy (PDL) of Rs. 60/liter—Rs. 5 more than what was imposed in the last review—on petrol, while the PDL on diesel has been set at Rs. 50/liter.
According to experts, the biggest reason for the price increase is not international rates, but rather the ongoing devaluation of the rupee against the U.S. dollar, which has pushed prices of fuel to new heights. The incumbent interim government has already made clear that under the $3 billion standby arrangement with the International Monetary Fund (IMF), it cannot afford to give any subsidies and must pass on all price differentials to consumers to maintain fiscal discipline.
However, it is likely that the new prices would trigger further inflation—already at roughly 25 percent year-on-year—burdening masses already struggling due to the mismanagement of the economy. Diesel, especially, is widely used in transport and agriculture sectors and any increase to its prices inevitably has a knock-on effect on inflation of essential commodities.
Over the past two weeks, protests against hefty electricity bills have threatened to spiral into civil disobedience. Due to the new fuel tariffs, further increases are expected in upcoming bills, triggering further unrest.