Govt may jack up petrol price by Rs10/litre in next review

KARACHI: The petrol price is likely to witness a significant increase by around Rs10 per litre in the next fortnightly review on an increase in global oil prices, according to industry sources on Friday.

The likely raise may even reach Rs14 per litre if the government also adjusts the exchange rate losses, unlike the previous review when the center didn’t pass on the impact of rupee devaluation.

According to the working of the country’s oil sector, the ex-depot price of petrol has showed Rs14.77 per litre for the next review of the prices with the exchange rate loss adjustment. The current ex-depot price of petrol is Rs272 per litre, which may go up to Rs286.77 per litre, if government decides to pass on the impact of global oil prices and exchange rate losses.

Even thought the government skips adjusting the exchange losses, the petrol price would still face an increase because of higher global oil prices. The expected raise in the price of petrol is based on the present rate of taxes. The government is charging Rs50 per litre levy on the petrol with zero general sales tax.

The expected rise in the price of petrol is based on Rs5 per litre exchange loss adjustment of Pakistan State Oil (PSO), which is due as government didn’t include the exchange rate adjustments in the past to keep the prices of the petrol on lower side, which would have been on the higher side after massive depreciation of rupee against the dollar in last two and half months when under IMF conditions, market-based exchange rate was allowed.

On the other hand, the price of high speed diesel (HSD) is likely to remain uncharnged in the next review of prices as current ex-depot price of HSD is also same compared to the working for next fortnightly price of diesel.

The next review of HSD price and its likely unchanged price is based on Rs17.50 exchange loss adjustment of PSO, which was also pending when dollar price shoot up massively in the last several weeks.

“The diesel price may come down by Rs15 per litre, if government doesn’t adjust the exchange rate loss”, sources said. The government raised the petroleum levy on HSD to Rs50 per litre under IMF conditions in the last review of prices and charging no GST on it.

According to the sources, although working of the oil sector is reflecting a rise in the price of petrol and no change in HSD, it all depends on the government as what it would decide.

In the present scenario, the added, the government has no option but to raise the price of petrol as its financial space is already squeezed. Also, the government is making desperate efforts to revive IMF programme to shore up the forex reserves.