Govt likely to keep diesel, petrol prices unchanged in next review despite soft global rates

KARACHI: The government might not pass on the major reduction in the international price of diesel and petrol to adjust the previous exchange losses as well as to raise taxation on the fuels, The News learnt on Monday.

Prices of diesel and petrol have recorded significant decline in the global market and average fortnight prices of both products would be taken for the next price revision on February 28, 2023.

According to the oil industry sources, the average price of diesel for the next fortnightly review dropped by $7/barrel, which in term of Pakistani rupee comes to Rs30/litre reduction for the domestic price of diesel. The average price of diesel in the global market fell to around $100/barrel compared to $107/barrel in the previous fortnight.

Average price of petrol dropped to $90/barrel for the next review of prices compared to $93/barrel in the last fortnightly review of prices, translating into Rs10/litre reduction for the consumers in the local market.

Sources pointed out that rupee appreciation against the dollar in the last two weeks also helped cut the import price of diesel and petrol, as the average exchange rate dropped by Rs8 for the next review of prices.

Oil industry sources were however not hopeful about any major reduction in the prices of diesel and petrol for the domestic consumers as government was expected to adjust the exchange losses, which it did not pass on fully to the oil sector in the last many reviews.

For instance, exchange loss adjustment of Rs88/litre was due on diesel, but the government only transferred Rs12/litre on this head, while the remaining was still to be adjusted. “It is likely that the government would pass on partially the adjustment because of getting space on the exchange rate side,” sources said.

Likewise, exchange loss adjustment of Rs34/litre was due on petrol, but the government only gave Rs12/litre to the oil industry.

Sources said that under the conditions put down by the IMF, the government might increase the petroleum levy (PL) on diesel to Rs50/litre as it has now got room to do it. Currently, it is Rs40/litre on diesel.

Sources expect Rs10/litre cut in diesel, if government does not impose GST, which otherwise would deprive the local consumers from the drop of diesel price in the global market.

Official industry sources do not expect any reduction in the price of petrol for the local consumers, which otherwise would have been down by Rs10 as per the trends of its price in the global market.