Petroleum prices in Pakistan may go up from March 16

Petroleum prices in Pakistan may go up from March 16

ISLAMABAD: Petroleum price in Pakistan may go up from March 16, 2023 owing for significant depreciation in local currency.

The country is scheduled to announce the petroleum prices on March 15, 2023 for next fortnight (March 16 – 31).

The continuous decline in rupee value has increased the possibility of further hike in petroleum prices for the next fortnight.

READ MORE: Rupee devaluation main culprit behind surge in petroleum prices

The local currency has recorded significant decline during the past one year. Weakness in rupee value against the dollar made the local currency worst currency in the region. The rupee crashed by 57 per cent during past one year to PKR 280.77 to the dollar on March 10, 2023 when compared with PKR 178.63 on March 10, 2022 in the interbank foreign exchange market.

On the other hand the prices of crude oil in international market recorded sharp decline. The prices of benchmark Brent crude oil recorded around 30 per cent decline during one year despite Russia-Ukraine War. Brent crude oil prices were $115 per barrel during last March 2022 and it fell to $83 in the current month of March 2023.

READ MORE: Pakistan ready to announce new petroleum prices on March 15

In contrast, the domestic prices of petrol and high speed diesel (HSD) recorded massive increase of 78 per cent and 94 per cent, respectively on Year on Year (YoY) basis by week ended March 09, 2023.

The comparison of global and domestic fuel prices showed the local market should have lower prices and people of the country would have been provided relief.

However, the ill-conceived policies of the government for making a successful IMF deal resulted in disaster for the country. The IMF deal cost the nation with massive depreciation of the local currency and immense increase in energy prices, which made the life miserable.

READ MORE: High petroleum prices bring down oil sales by 21 pc

Since Pakistan is net importer of petroleum products. The sharp rise in dollar value adversely affected the import bill in terms of rupee, which subsequently passed on to end consumers.

The import bill of petroleum group recorded a decline of 9.27 per cent to $10.61 billion during first eight months (July – January) 2022-2023 as compared with $11.69 billion in the corresponding months of the last fiscal year.

The massive depreciation in rupee value, the import bill in rupee terms recorded an increase of 19.55 per cent to PKR 2.38 trillion during the period under review as compared with PKR 1.99 trillion in the same period of the last fiscal year.

On one hand the rupee was causing huge price inflation and other hand the government in order to get IMF program further burden the oil prices with implementation of petroleum levy.

However, despite making all out efforts by the government the IMF had still a list of demand for finalizing staff level agreement (SLA) for release of $1.2 billion under Extended Fund Facility (EFF).

It is interesting to note that the in the current prices of petroleum products the government avoided imposing the sales tax. The authorities have kept the sales tax at zero per cent on the petroleum products despite raising the general sales tax rate to 18 per cent from 17 per cent.

READ MORE: Dar announces cut in petroleum prices from March 01

It is believed that the IMF was against grant of tax concessions or exemptions in any form. It means that the government may impose the sales tax on supply, which may result in significant increase in petroleum products.

Following are the rates of petroleum products, which would remain applicable till March 15, 2023:

MS PetrolRs 267 per litre
High Speed DieselRs 280 per litre
Kerosene OilRs 187.73 per litre
Light Diesel OilRs 184.68 per litre

Pakistan is ready to announce new petroleum prices as per schedule on March 15, 2023 for next fortnight March 16 – 31, 2023.

The country likely to increase the prices of petroleum products for next fortnight due to massive depreciation of Pakistani Rupee (PKR) during the period.

The local currency fell by 7.37 per cent to PKR 280.77 to the dollar at closing on March 10, 2023 as compared with PKR 261.50 on February 28, 2023. During the period the local unit hit the historic low of PKR 285.09 on March 02, 2023.