On August 31, 2023, Pakistan is scheduled to announce petroleum prices for first half of September 2023. The anticipated price hike, set to take effect from September 1, 2023, is a direct response to the alarming depreciation of the Pakistani Rupee (PKR) against the US dollar.
READ MORE: Chinese Company Warns to Stop Work at Thar Coal Mines Over Non-Payment
The devaluation of the PKR has been an ongoing concern since the last petroleum price adjustment on August 15, 2023. On August 30, 2023, the PKR hit an all-time low, trading at PKR 304.45 against the dollar in the interbank foreign exchange market. This marked a substantial depreciation of PKR 12.94 from its value of PKR 291.51 on August 15, 2023. The persistent decline has raised significant apprehensions about the sustainability of existing petroleum prices.
READ MORE: Petroleum Levy Soars to Record High Under PDM Government, Amidst Economic Challenges
Pakistan, a net importer of petroleum products, heavily relies on these imports to meet its domestic energy needs. Despite the adverse impact of elevated petroleum costs on local demand, the country imported energy products worth $791 million in July 2023, compared to $1.44 billion in the same month the previous year. This import dependency places added pressure on the government to align price adjustments with global market fluctuations.
READ MORE: Pakistan Poised for Possible Petroleum Price Hike Amid Rupee Depreciation
The impending revision in petroleum prices poses a formidable challenge for the interim government, particularly in the face of escalating inflation. In a surprising move, the interim government had already announced substantial increases in petrol and High-Speed Diesel (HSD) prices effective from August 16, 2023. Petrol prices surged by Rs 17.50 per liter, reaching Rs 290.45 per liter from the previous Rs 272.95 per liter. Simultaneously, the cost of high-speed diesel (HSD) soared by Rs 20 per liter, reaching Rs 293.40 from Rs 273.40 per liter.
READ MORE: Inevitable Petroleum Price Hike Looms for Pakistan in Early September 2023
With the continued depreciation of the rupee against the dollar, an additional increase in petroleum prices appears inevitable. These developments compound the concerns of Pakistani citizens who are already grappling with economic uncertainties. The government faces the daunting task of striking a delicate balance between managing the currency crisis and ensuring that the cost of living remains manageable for its citizens.
As the nation anxiously awaits the government’s decision on petroleum prices, it remains to be seen how the authorities will navigate these challenging economic times and address the pressing issues at hand.
