Pakistan is set to revise petroleum prices for the second half of April 2023, and experts believe that domestic prices may increase due to the decline in the value of the Pakistani rupee against the US dollar and an increase in international oil prices over the past few weeks.
The rupee has fallen sharply against the dollar since the beginning of April 2023, primarily due to uncertainty about inflows from the International Monetary Fund (IMF) and other friendly countries. On the other hand, the international prices of benchmark Brent crude oil have also increased recently due to production cuts by the Organization of the Petroleum Exporting Countries (OPEC).
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As Pakistan is a net importer of petroleum products to meet its domestic demand, any revision in exchange rates and an uptick in international oil prices can affect domestic prices.
Despite a decline in Pakistan’s petroleum import bill, which fell to $11.88 billion during the first eight months (July-February) of fiscal year 2022/2023, down 8.28% compared to the corresponding months of the previous fiscal year, the significant depreciation of the Pakistani rupee by 23% resulted in an import bill increase in rupee terms.
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During the first eight months of the current fiscal year, the petroleum bill increased to PKR 2.72 trillion compared to PKR 2.21 trillion in the same months of the previous fiscal year. The import of petroleum products also registered a decline of 14.47% to $5.35 billion during July-February 2022-2023 when compared with $6.26 billion in the same period of the last fiscal year, while import of petroleum crude increased by 10.32% to $3.48 billion during the same period.
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Pakistan revises petroleum prices every 15 days based on changes in international oil prices and other domestic factors, including exchange rates. On March 31, 2023, the prices of petrol and high-speed diesel (HSD) remained unchanged at Rs. 272 per liter and Rs. 293 per liter, respectively, for the next fortnight starting from April 1, 2023.
However, the prices of kerosene oil and light diesel oil have been reduced by Rs. 10 each to Rs. 180.29 and Rs. 174.68, respectively.
The government is also working on a scheme to provide petroleum products at subsidized rates to lower-income groups. Minister of State for Petroleum Musadik Malik recently stated that various suggestions were under consideration, including using the Benazir Income Support Program (BISP) network, issuing specific subsidy cards, or generating a one-time password (OTP) for eligible citizens’ ease.
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The ministry is reviewing all suggestions and will finalize the most viable and practical one with the help of all stakeholders, including petroleum dealers associations and trade bodies, to ensure effective implementation and relief to citizens. The government is also working to ensure sufficient supply of petroleum, discourage black marketing, and hoarding of fuel.
