Pakistan Poised for Possible Petroleum Price Hike Amid Rupee Depreciation

Pakistan Poised for Possible Petroleum Price Hike Amid Rupee Depreciation

Karachi, August 28, 2023 – Pakistan is expected to announce an increase in petroleum prices for the first half of September 2023 during its scheduled announcement on August 31.

This impending decision is a direct consequence of the persistent depreciation of the Pakistani Rupee (PKR) against the US dollar, a concern that has persisted since the last adjustment in petroleum prices on August 15, 2023.

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The imminent price hike, scheduled for August 31, 2023, is heavily influenced by the alarming devaluation of the PKR against the US dollar. On August 25, 2023, the PKR reached an all-time low of PKR 301 against the dollar, reflecting a sharp depreciation of PKR 9.49 from PKR 291.51 on August 15, 2023, in the interbank foreign exchange market. This significant decline has raised substantial concerns about the sustainability of current petroleum prices.

Pakistan, a net importer of petroleum products, relies heavily on these imports to meet its domestic energy demands. Despite the adverse impact of high petroleum product 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 manage price adjustments in line with global market fluctuations.

The upcoming revision in petroleum prices presents a formidable challenge for the interim government, especially given the nation’s struggle with mounting inflation. The last price revision on August 15, 2023, under the caretaker government, witnessed substantial increases in the prices of petrol and High-Speed Diesel (HSD).

In a surprising move, the interim government announced a significant hike in petroleum rates 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. Similarly, the cost of high-speed diesel (HSD) skyrocketed by Rs 20 per liter, propelling it to Rs 293.40 from Rs 273.40 per liter.

Given the ongoing decline in the rupee’s value against the dollar, an increase in petroleum prices now seems inevitable. These developments compound the concerns of Pakistani citizens already grappling with economic uncertainties. The government faces the challenging task of striking a delicate balance between managing the currency crisis and ensuring that the cost of living remains manageable for its citizens. In the coming days, the nation will closely watch how the government addresses these pressing issues and navigates through these challenging times.

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