Oil industry sources report that there may be a Rs20 per litre increase in petrol prices at the upcoming review on February 15, 2023. The increase is based on calculations of the international price of petrol, specifically on a free on board (FOB) basis.
During the previous fortnightly review of fuel prices, the government implemented a substantial increase of Rs35 per litre. Currently, the government imposes a petroleum levy (PL) of Rs50 per litre, while the general sales tax (GST) has not yet been levied.
Sources suggest that the price of petrol could increase further if the foreign exchange rate is adjusted at the next review. They noted that the exchange rate is currently unfavorable, negating any potential benefits or reductions for local consumers.
Despite a decrease in international petrol prices, the sharp depreciation of the rupee against the dollar has offset gains, adversely affecting domestic consumers. Additionally, the sources warned that the government may implement a Rs20 per litre adjustment to account for the exchange rate, which could result in an overall increase of up to Rs40 per litre.
The price of diesel, as reported by sources, has not seen any increase on FOB without exchange rate adjustments. However, they stated that diesel prices could potentially increase in the next review if the exchange rate is adjusted. The government previously adjusted Rs14 per litre on diesel due to the exchange rate, but the recent appreciation of the dollar has effectively negated this adjustment from the last review.
While global diesel prices have reportedly decreased by five to six dollars per barrel, the depreciation of the rupee prevents the government from passing on the reduction to local consumers.
The most recent price adjustment of petroleum products was made on January 29, 2021, by the federal government. Following the review, petrol was priced at Rs249.80 per litre, high-speed diesel at Rs262.80 per litre, kerosene oil at Rs189.83 per litre, and light-speed diesel at Rs187 per litre.
The government implemented an increase in petrol and high-speed diesel prices by Rs35 per litre each, and raised the rates of kerosene oil and light diesel oil by Rs18 per litre each on January 29, 2023.
Pakistan is currently experiencing a shortage of petrol, with its most populous province, Punjab, being hit the hardest. The crisis has affected major and minor cities, towns, and villages in Punjab, with the shortage being attributed to petroleum dealers.
Sources previously reported that in addition to a low import of petrol by most Oil Marketing Companies (OMCs), petroleum dealers were also involved in hoarding petrol in anticipation of an expected price increase in mid-February.
