KARACHI: The exchange rate adjustment is likely to deprive domestic consumers of any benefits of retreating international prices of petroleum products in the next fortnight, The News learnt on Saturday.
Local oil industry’s calculations for the next fortnightly review of petroleum prices showed that instead of any reduction, the prices may increase as a result of the aforesaid adjustment to compensate the refineries and oil marketing companies (OMCs).
According to the numbers crunched by the oil sector, the price of petrol may jump by Rs16.48/litre to Rs243.67 from existing Rs227.19/litre in the next fortnightly review of petroleum products prices.
Likewise, the price of high speed diesel (HSD) may go up by Rs6.80/litre to Rs251.75/litre from Rs244.95/litre.
The exchange rate adjustment of Pakistan State Oil (PSO) has been estimated at Rs25/litre with ex-refinery exchange rate adjustment of Rs15/litre for petrol and Rs10/litre for HSD.
The government is currently charging Rs20 petroleum levy (PL) on petrol and Rs10 on HSD. Rs7/litre dealers’ margin and Rs3.68/litre margin of OMCs are also included in end consumer price.
Officials in the oil sector said that in view of exchange rate adjustment, a reduction in the prices in the next fortnightly review was next to impossible; however, the prices might decrease in the coming fortnights if the global oil markets remained tame.
The government had changed the exchange rate formula from the last day of a fortnight to an average of two weeks as the policymakers were of the view that steep depreciation of the rupee against the dollar in recent months had rendered the existing pricing mechanism ineffective.
Global crude oil prices remained around $96/barrel in August so far, where average price of petrol was $100/barrel and average price of HSD stood at $118/barrel in the international market.
Though global oil markets are retreating, the exchange rate adjustment of last fortnight would not allow the government to reduce the prices.
The government cannot give any subsidy to reduce the prices under the conditions agreed with the International Monetary Fund (IMF), which is expected to release the next tranche of loan to Pakistan by the last week of August.