ISLAMABAD, March 15: The caretaker government on Saturday announced a second consecutive increase in prices of petroleum products in one month, drawing immediate criticism from opposition parties.

Prices of petrol were raised by Rs4.11 per litre, of HOBC by Rs4.89, kerosene oil by Rs2.71 and light diesel oil by Rs2.52 to be applicable for next 15 days.

What is described by political parties and the general public as a “departing cake” from the caretaker government, higher fuel prices would cause a rise in inflation and affect economic growth.

Analysts said that an immediate impact would be witnessed in the shape of substantial increase in transport fares and prices of food items which would ultimately hit poor people.

After the announcement of new prices by the Oil and Gas Regulatory Authority (Ogra), the price of petrol will go up to Rs62.81 per litre from Rs58.70, diesel from 36.07 to Rs38.59, kerosene oil from Rs38.73 to Rs41.44 and HOBC to Rs74.77 from Rs69.88.

According to Ogra, the government would still provide a subsidy of Rs18.05 pre litre on kerosene oil and Rs16.02 on diesel after the increase. The cumulative price differential for the fortnight will be about Rs10.5 billion which the government will bear as subsidy.

The hike in petroleum prices was likely after a constant increase in oil prices which hit $105 per barrel in the international market during the last fortnight. The impact could have been minimal for consumers if the former PML-Q government had passed on the increase periodically.

The higher-than-expected increase would also push the country’s import bill to around $40 billion, the highest ever, by the end of June 2008. The import bill of oil is also expected to reach $15 billion.

Economic Adviser to the Finance Ministry Dr Ashfaq Hassan Khan told Dawn that a constant increase in the international market had forced the government to pass on a partial increase to consumers.

He said the government had already taken a hit of Rs80 billion for not passing the increase in oil prices which had been frozen since July 1, 2007, till February 29, 2008.

Mr Khan said the government would still be providing Rs15 billion in subsidies per month after the hike.

The government in the last budget had projected that oil prices in the international market would touch $69 per barrel which actually rose to a record $92 per barrel.

According to statistics of the finance ministry, subsidies to be doled out on account of oil prices would be around Rs130 billion by the end of June 2008. The average subsidy on oil was Rs10 billion during July-Feb 2007-08. It has now increased to an average Rs15 billion in March-June 2007-08.