With exchange loss adjustment on cards, fuel prices to stay high

KARACHI: Consumers are unlikely to receive any relief in the form of reduction in the prices of petroleum products in the next fortnightly review, The News learnt on Monday.

According to people in the oil industry and government sector, it was unlikely that the next review of petroleum prices would provide any relief to the consumers, as international prices of crude and petroleum products did not leave room for the government to reduce prices.

According to them, the ex-refinery prices of diesel and petrol were showing nominal reduction for the next fortnight; however, it could not be adjusted to lower the prices of petroleum products as government has yet to adjust the exchange losses, which have been lingering on for quite some time.

In the last fortnightly review, government kept the prices of petroleum products unchanged by not adjusting the exchange loss, which was likely to be adjusted in the next review, sources believed.

With the need to adjust the exchange loss along with the International Monetary Fund (IMF) demand to generate additional revenue by raising the petroleum levy on diesel, the government was not in a position to reduce the prices of petroleum products for end consumers.

Presently, government is charging Rs50 petroleum levy on petrol and Rs12 on diesel, whereas under the accord with the IMF, government has to jack up the levy on diesel to collect the additional revenue.

Sources pointed out that if the government adjusted the exchange loss and raised the petroleum levy on diesel to Rs50 as per IMF conditions, the price of diesel might go up manifold.

However, they added, it was likely that the rate of petroleum levy might see some jump along with an adjustment in exchange losses, which might raise the price of diesel as well as retail price of petrol in the next fortnightly review of fuel prices.

Sources said that government has been withholding the imposition of general sales tax (GST) to avoid massive increase in the prices of petroleum products; however, the IMF was pressing the country to go for its imposition. Sources said that GST could be imposed on petrol as petroleum levy on it has already touched the highest level.

The current price of high speed diesel in Pakistan is Rs235.30/litre whereas petrol is available at Rs224.80/litre in the local market. The price of light speed diesel is Rs186.50/litre and kerosene Rs191.83/litre in the market.