The government has decided not to reduce the prices of diesel and petrol for local consumers, despite a significant decrease in their international prices. This decision is intended to offset previous exchange losses and raise taxation.
On February 28, 2023, the average fortnightly prices of petrol and diesel in the global market will be used for the next price revision. According to industry sources, the average price of diesel for the next fortnightly review has dropped by $7 per barrel, which equates to a reduction of Rs30 per litre for domestic diesel prices.
The global average price of diesel has fallen to approximately $100 per barrel compared to $107 per barrel in the previous fortnight. Similarly, the average price of petrol has dropped to $90 per barrel for the next review of prices compared to $93 per barrel in the last fortnightly review, which translates into a reduction of Rs10 per litre for consumers in the local market.
According to Geo, the appreciation of the Pakistani rupee against the dollar in the last two weeks has also contributed to the reduction in import prices of diesel and petrol. However, industry sources do not expect any significant reduction in the prices of diesel and petrol for domestic consumers.
The government is expected to adjust the exchange losses, which were not passed on fully to the oil sector in the last several reviews. For example, an exchange loss adjustment of Rs88 per litre was due on diesel, but the government only transferred Rs12 per litre on this head, leaving the remaining amount to be adjusted. The same is true for petrol, with an exchange loss adjustment of Rs34 per litre due, but only Rs12 per litre being given to the oil industry.
Under the conditions set by the International Monetary Fund (IMF), the government may increase the petroleum levy (PL) on diesel to Rs50 per litre, as it now has room to do so. Currently, the PL on diesel is Rs40 per litre.
If the government does not impose GST, sources expect a cut of Rs10 per litre in diesel prices, which would otherwise deprive local consumers of the drop in diesel prices in the global market.
However, official industry sources do not anticipate any reduction in the price of petrol for local consumers, which would otherwise have been down by Rs10, as per the trends of its price in the global market.
