Petrol prices are expected to rise in the country as the government is planning to fund road projects from the revenues generated by from selling fuel.

Consumers will now have to pay more for fuel at petrol stations due to increased taxation. The petrol prices may have risen by about three cents a litre a year. 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.

AA Petrol watch 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.

Motor Trade Association spokesperson Ian Stronach said, "The reality is New Zealanders and driving slightly less each year and cars are becoming more fuel efficient so it's a bit of a double bind for the Government. They have to build more roads, have to create and maintain a better roading structure, but the tax base is declining because people are getting more careful when they drive and the cars they do drive get further on a litre of petrol so the Government's got to find the money somewhere."