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Wednesday September 28, 2022

Latest petrol price: No good news for Pakistanis

As per the working by OGRA, petrol price is expected to increase by Rs9.95 per litre and high-speed diesel by Rs8.96 per litre

By Khalid Mustafa & Web Desk
August 15, 2022
Latest petrol price: No good news for Pakistanis

ISLAMABAD: The federal government is expected to announce the petroleum prices for the next fortnight today but there are no hopes for relief for the common man.

Finance Minister Miftah Ismail on Sunday said that owing to the conditions set forth for the country by the International Monetary Fund (IMF), the government is not in a position to afford any petroleum subsidies.

During Geo News' programme "Naya Pakistan", the finance minister was asked whether the government was planning to reduce the prices of petrol in the country from August 15 in accordance with the decrease in the international market, and the strengthening of the rupee against the dollar.

In response, Ismail said that as per the conditions of the IMF, the country has made arrangements to borrow $4 billion from friendly countries.

He added that the finance ministry will not impose any more taxes and levies on petroleum products, but reiterated that the government could not bear any more losses by providing subsidies.

What could be the new petrol price?

Contrary to the expectations that the POL prices will decrease from August 16, if kept in view the existing exchange rate formula based on the average of two weeks, the price of petrol is expected to increase by Rs9.95 per litre as per the working by OGRA and high-speed diesel by Rs8.96 per litre, a senior official at the Energy Ministry told The News.

The increase in the POL price will certainly be a shock knowing the fact that the value of the local currency has appreciated against the US dollar by almost Rs20 and crude oil prices also fluctuated between $92 to close to 100 per barrel.

However, the oil industry is of the view that the price of petrol from August 16 should be increased by31.08 per litre and diesel by Rs8.96. And this is one of the scenarios the oil industry is expecting, keeping in view the average exchange rate at Rs229.

PSO’s imports remained costly with also exchange rate at the higher side and LCs got opened at more than the SBP rate by commercial banks, which is why the price of petrol and diesel will escalate this time.

The finance ministry is in a fix about the finalization of the average exchange rate, which will determine the exact price of MS and diesel from August 1, 2022.

PSO, according to industry sources, needs to adjust upward the exchange rate loss by Rs16 on HSD and Rs30 on petrol.

The current Petroleum Development Levy (PL) stands on diesel at Rs10 per litre and Rs20 on petrol. The dealer margin on petrol has also been increased to Rs7 per litre.

What is oil price formula?

The oil industry says that the said increase in prices of petrol and diesel will be as per the existing OGRA price formula, the last 15 days Platts average plus PSO vessels premium and PSO import incidentals.

The working is also based on the average of the last 15 days' dollar exchange rate, with estimated PSO dollar exchange rate loss adjustment (as per the last fortnight’s price formula).

Top Energy Ministry officials said that the Mogas price from August 16 will increase due to high premiums and high L/C rates, but diesel will witness a lesser increase as it has a fixed margin and no L/C. But after August 15, the government will be able to determine the exact POL prices for the next fortnight.