Govt May Hike Oil Prices Up to Rs 7.67 per Litre

Staff Report
The government may hike prices of petroleum products by up to Rs 7.67 per litre for the second half of July 2024. Consumers, already burdened with inflation, may face another shock with this potential increase.

According to industry sources, the petrol price is likely to increase by Rs 7.67 per litre, while high-speed diesel (HSD) could see a hike of Rs 3.72 per litre. Additionally, kerosene oil may go up by Rs 2.39 per litre, and light diesel oil (LDO) could increase by Rs 0.92 per litre.FBR Says No Advance Tax Applicable on Oil Dealers, OMCs

This price hike is based on factors such as global oil prices, currency exchange rates, and financial considerations for the energy sector. If approved, consumers could pay Rs 273.28 per litre for petrol, Rs 281.25 per litre for HSD, Rs 184.25 per litre for kerosene oil, and Rs 166.65 per litre for LDO during the last fifteen days of July 2024.

The estimated fuel price reductions are based on the current tax structure, calculated with estimated dollar exchange adjustments, and the Inland Freight Equalization Margin (IFEM). The IFEM on petrol is expected to rise from Rs 6.12 to Rs 7.79 and from Rs 3.11 to Rs 4.51 on HSD.

Sources also indicated that oil prices could see a further hike in case of an additional petroleum levy of Rs 5 per litre. If the government increases the PL by Rs 5 per litre, petrol prices will stand at Rs 278.28 per litre, witnessing a hike of Rs 12.67, and HSD will be available at Rs 286.17 per litre after a hike of Rs 8.72 per litre.

The Oil and Gas Regulatory Authority (OGRA) will submit its recommendations for future oil prices on July 15, after which the finance ministry will consult with the Prime Minister for a final decision.

Currently, petrol is priced at Rs 265.61 per litre, HSD at Rs 277.45 per litre, kerosene oil at Rs 184.25 per litre, and LDO at Rs 166.65 per litre in the open market. Petrol is mainly used for cars and motorcycles, while HSD powers heavy vehicles like trucks and buses, as well as industrial machinery. Kerosene oil is essential for cooking and lighting in households without electricity, and LDO is used in industrial boilers, furnaces, and certain engines, particularly in the textiles, cement, and power generation sectors.

If approved, the increase in fuel prices is expected to add additional burden on the already struggling masses and contribute to the already skyrocketing inflation.