Pakistan is likely to make announcement to review petroleum prices ahead of scheduled date of January 31, 2023 considering the long queue at fuel stations fearing massive price hike.
Reportedly, many fuel stations in many parts of the country have closed supply to make money on the back of expected price raise in petroleum prices.
Some private TV channels have shown footages of fuel stations without petrol. Whereas people were shown in long queue on those fuel stations which were serving.
There is consensus amongst economists and industry experts that the government would announce a phenomenal increase in prices of petroleum products after the rupee crashed against the dollar.
The foreign currency market witnessed that the Pakistan Rupee (PKR) recorded steep fall against the dollar during last two days i.e. January 26 and 27.
The local currency devalued by PKR 31.71 or 14 per cent against the dollar during past two days and closed at PKR 262.60.
The latest rates of petroleum products effective till January 31, 2023 are: High speed diesel price is at Rs227.80. The price of petrol is Rs214.80. The price of kerosene oil is to Rs171.83. And the price of light diesel oil is Rs169.
Industry sources said that considering the panic the government may make any announcement related to petroleum prices to defuse the tension. Some said that the government might not increase the price in its first announcement but it might raise in few days later.
The country is facing economic crisis like situation and negotiation a bailout package with the International Monetary Fund (IMF), which was stalled for the past many months.
Reportedly, the government is planning to introduce mini budget for generating additional PKR 280-300 billion as demanded by the IMF. Which may also include imposition of sales tax on petroleum products.
The IMF loan program under Extended Fund Facility (EFF) was stalled for the past many months and it derailed external position of the country.
Analysts believe that new petrol price may go up to PKR 309 per liter in Pakistan following steep fall in rupee value and expected imposition of sales tax on petroleum products.
According to analysis of expected petroleum prices after changing exchange rate scenario, Fahad Rauf, Head of Equity Research at Ismail Iqbal Securities outlined a scenario of petroleum prices after new exchange rate and with or without imposition of sales tax on petroleum products.
As per his analysis, the petrol rate may be increased by 44 per cent to PKR 309 per liter from existing PKR 215 per liter after considering current international prices and dollar/rupee, petroleum levy and sales tax imposition. Similarly, in the same scenario the rate of diesel may also go up by 50 per cent from PKR 228 to PKR 341.
Rauf also calculates the prices of petroleum products with latest decline in rupee value. According to him, the petrol rate may go up by 23 per cent to PKR 264 per liter from existing PKR 215 considering current international prices and dollar/rupee, petroleum levy but without sales tax imposition. Similarly, rate of diesel may also go up in same scenario by 28 per cent to PKR 291 per liter from existing PKR 228.
The analyst has estimated the petroleum prices on the basis of exchange rate as of January 26, 2023 when rupee crashed to record low PKR 255.43 against dollar after posting a historic single day fall PKR Rs24.54. However, the rupee has further declined to make new historic low of PKR 262.60 to the dollar in interbank foreign exchange market on January 27, 2023.