Pakistan is set to adjust its petroleum prices on April 30, 2023, taking into account the current exchange rate fluctuations and prevailing oil prices in international markets.
The country revises its petroleum prices every two weeks, with the next revision for the first half of May 2023 scheduled at the end of this month.
Over the past year, international oil prices have seen a massive decline. The benchmark Brent crude oil, for instance, fell by 18.51 percent from $96.07 per barrel on April 25, 2022, to $78.29 by April 25, 2023. In contrast, fuel prices in domestic markets have risen by over 100 percent. For instance, the Sensitive Price Indicator (SPI) based inflation report released by PBS for the week ending April 13, 2023, shows that the price of diesel has increased by 102.84 percent, while petrol has increased by 81.17 percent.
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The depreciation of the Pakistani Rupee (PKR) against the dollar is a major factor behind the upsurge of petroleum prices in domestic markets. The local currency has plunged by 52.47 percent to PKR 283.47 to the dollar by April 20, 2023, compared with PKR 185.92 on the same day a year ago.
Experts believe that despite the recent decline in international oil prices, the government may not be in a position to reduce local prices because of rupee depreciation and the need to generate revenue. As a net importer of petroleum products to meet local demand, any change in exchange rates and international oil prices can impact domestic prices. The import of petroleum products, for instance, has declined by 20 percent during the first nine months (July-March) of the current fiscal year 2022-2023, from $7.287 billion during the same period of the last fiscal year to $5.836 billion in the current fiscal year, according to data released by the Pakistan Bureau of Statistics (PBS).
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Previously, the government enhanced petroleum prices on April 15, 2023, for the second half of the ongoing month, citing an increase in international oil prices and exchange rate variation. The new price of petrol, for instance, is Rs282 per liter, effective from April 16, 2023, up from the previous price of Rs272 per liter. The price of kerosene has also increased by Rs5.78 to Rs186.07 per liter from Rs180.29. However, the prices of High-Speed Diesel (HSD) and Light Diesel Oil (LDO) have remained unchanged at Rs293 and Rs174.78, respectively.
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Nevertheless, the government has assured the public that it is working on a scheme to provide petroleum products at subsidized rates to lower-income groups. The Minister of State for Petroleum, Musadik Malik, recently stated that various suggestions are under consideration, such as using the Benazir Income Support Program (BISP) network, issuing specific subsidy cards, or generating a one-time password (OTP) for eligible citizens’ ease.
