People in Pakistan woke up on Thursday to the shock of a historic price hike in the prices of petrol and gas as the government tried to appease the IMF for unlocking the critical loan tranche for the cash-strapped country.

The “petrol bomb” as the price hike is termed these days, was dropped around Wednesday midnight, hours after the government unveiled a tax-loaded 'mini-budget' in the Parliament to extract Rs 170 billion from the people through new taxes and increase in electricity and gas prices.

The price of petrol was hiked to Rs 272 per litre after an increase of Rs 22.20, a press release from the Finance Division read Wednesday night, noting that the surge has taken place due to the rupee's devaluation against the dollar.

The price of the high-speed diesel (HSD) hiked by Rs 17.20, kerosene by Rs 12.90 and light diesel oil (LDO) by Rs 9.68. The new price of HSD will cost Rs 280 per litre. Kerosene will be available at Rs 202.73 whereas LDO will be sold at Rs 196.68 per litre.

“Increase in price is due to Pakistani rupee devaluation applicable for the calculation of current pricing period,” the press release said, adding that the prices would be effective from February 16.

The increase came as finance minister Ishaq Dar presented the money bill in the parliament to fulfil the International Monetary Fund's (IMF) demand to increase revenue before it releases USD 1.1 billion out of the USD 7 billion loans.

The increase in the price of petroleum products was one of the preconditions of the Washington-based lender, which will lead to a hike in the already record-high inflation, coupled with the new fiscal measures undertaken through the 'mini-budget'.

Petrol is used by motorbikes and cars and is an alternative to compressed natural gas.

Gas is not already available at CNG stations to feed transport due to its availability issue in the winter season.

Kerosene oil is used in remote areas where liquefied petroleum gas is not available for cooking purposes. Pakistan Army is a key user of it in northern parts of Pakistan.

Pakistan is struggling with instability stemming from an economic crisis, last summer's devastating floods, and a recent surge in terror attacks across the country.

Pakistan and IMF officials held 10 days of marathon talks in Islamabad, from January 31 to February 9, but could not reach a deal as the fund demanded prior actions before signing any agreement to release USD 1.1 billion out of the USD 7 billion deal agreed in 2019.

Pakistani and IMF officials are now holding talks in virtual settings to finalise a deal to provide the much-needed funds to shore up the foreign exchange that dropped to below USD 3 billion this month.

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