The petrol prices have been increased by 3 cents per litre due to the first increase in excise tax by the authorities in the country.

The industry is expecting the excise rate to increase further and oil firms are planning to transfer the burden from increased taxation to the customers. Oil firms including BP, Caltex and Z are all increasing their prices by 3c a litre today to about $2.20 per litre. The companies have agreed to absorb the extra GST of about half a cent and not transfer the burden to the customers.

"It is important to distinguish between this government-implemented tax increase and a normal market increase which would be influenced by components such as the price on the international market, or the exchange rate,'' BP spokesman Jonty Mills said.

Z spokeswoman Sheena Thomas said that the company is facing low profits and there is no scope of absorbing higher taxes. AA Petrol watch spokesman Mark Stockdale said the authorities had indicated that the taxes might be increased three times in the coming three years.

The 91-Octane petrol would now cost about $2.20 a litre. Estimates show that the tax in petrol accounts for more than 50 cents a litre.