Petrol and Diesel Sales Fall After Price Hikes

The demand for petrol and diesel has dropped by 12% and 16% respectively in June 2022 compared to the previous month, in the wake of imposition of taxes by the new coalition government.

Petrol is mostly used by two, three and four-wheeler vehicles, while diesel is mostly consumed by the transport, industrial and agriculture sectors. The demand for petrol decreased to 702,000 tons in June compared to 776,000 tons in May. Sales of diesel dropped to 713,000 tons in June compared to 776,000 tons in the previous month.

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Sales of all petroleum products (including petrol, diesel, kerosene oil & LDO) dropped 11% on a month-on-month basis to 1.94 million tons in June. According to analysts, a significant increase in petroleum product prices has resulted in a noticeable reduction in their consumption.

The government has increased the petrol price by 65.98% (or Rs 98.99) to Rs 248.74 per liter in the past one month (May 27 to July 1). It has revised the diesel price by 91.84% (or Rs 132.39) to Rs 276.54 per liter during the same period. It has also imposed the levy of Rs 10 per liter on petrol and Rs 5 per liter on all other petroleum products including diesel with effect from July 1, 2022.

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The increase in prices came on the back of complete withdrawal of subsidies on sales of petroleum products and imposition of petroleum development levy. Analysts believe the sales of petroleum product may further drop by up to 10% in July and will keep falling over the next three to four months in the backdrop of these price hikes.

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