Petrol Price Jumps to Record Rs458 Per Litre as Government Raises Fuel Taxes
By Shahzad Paracha :
The federal government has raised petrol prices by Rs137 per litre, pushing the cost to a record Rs458.4 per litre after Prime Minister Shehbaz Sharif approved a significant increase in fuel taxes.
The latest adjustment represents a 43 per cent surge and places petrol prices far above the increase seen in international markets. The move comes after the government raised the petroleum levy on petrol to an unprecedented Rs160.61 per litre. The levy was increased from Rs106 to around Rs161 per litre, effectively adding Rs55 in new taxes with a single decision.
At the same time, the price of high-speed diesel has climbed by Rs185 per litre, or 55 per cent, reaching a historic high of Rs520.35 per litre. While the petroleum levy on diesel has been abolished, the government has retained a carbon levy of Rs2.5 per litre along with other import-related taxes.
Officials said the decision followed unsuccessful negotiations with the International Monetary Fund, which has capped fuel subsidies at Rs152 billion. The government had sought additional fiscal space to cushion consumers from the sharp rise in global oil prices but failed to secure IMF approval.
The inability to reach an agreement with the lender has forced the government to shift more of the burden onto consumers. The latest increase also reflects the government’s attempt to generate additional revenue and partly offset diesel costs through higher taxes on petrol.
This marks the second major fuel price hike within a month. Earlier, petrol and diesel prices were raised by Rs55 per litre, resulting in a cumulative increase of about 63 per cent for petrol and 75 per cent for high-speed diesel over the past few weeks.
Petroleum Minister Ali Pervaiz Malik and Finance Minister Muhammad Aurangzeb announced the revised prices through a recorded video statement. The announcement was made a day earlier than usual, which officials said was intended to prevent panic buying and hoarding at petrol stations.
According to the petroleum minister, international petrol prices rose by around 6.5 per cent during the past week to $136.4 per barrel, while high-speed diesel surged by 20 per cent to $285 per barrel.
Other petroleum products have also become more expensive. The price of kerosene oil has increased by Rs34 per litre to Rs468, while light diesel oil has gone up by Rs30 per litre to Rs395.
The surge in global oil prices follows escalating tensions in the Middle East after US and Israeli strikes on Iran. In response, Iran has shut down the Strait of Hormuz, a key global shipping route for oil and gas, disrupting supply and driving prices higher worldwide.
The new price hikes are expected to intensify economic pressure on households already facing rising living costs. Recent data suggests poverty levels have reached their highest point in more than a decade, while unemployment and income inequality have also climbed significantly.
Although the government had earlier allocated about Rs390 billion as a contingency reserve under IMF guidance for emergencies such as conflict or natural disasters, critics say the funds were not fully used to shield consumers from the current fuel shock.
Over the past three weeks, the government has provided around Rs129 billion in subsidies by cutting public spending, including reductions in development funds and deductions from government salaries. However, analysts warn that the latest increases will likely push transportation and energy costs even higher across the economy.
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