Thursday September 28, 2023

Petrol prices to spike again amid rupee depreciation

August 31, 2023

KARACHI: The interim government is likely to increase the price of petrol by more than nine rupees and diesel by Rs19.45 in its next fortnightly review, the oil industry said on Wednesday, citing the impact of the rupee’s depreciation.

According to the working of the oil industry, about the ex-depot prices of the petroleum prices, price of petrol and high speed diesel would likely record substantial increase. Government would review the prices of petroleum prices on Thursday night under the fortnightly review of the prices’ formula.

The working shows that ex-depot price of petrol would go up by Rs9.65/litre to stand at Rs300.10/litre for the next fortnight, compared to its existing price of Rs290.45/litre.

Similarly, the price of high speed diesel is indicating an even bigger increase of Rs19.42/litre in the next fortnight. This would raise the price of diesel to Rs312.82/litre compared to its existing price of Rs293.40/litre.

The price of kerosene is also indicating Rs13.82/litre increase, and its ex-depot price would peak to Rs230.97/litre compared to the present Rs217.15/litre. The ex-depot price of light diesel indicates a hike of Rs8.65/litre and its ex-depot price is expected to move upward to Rs208.45/litre compared to Rs199.79/litre presently.

According to the industry working, the major increase in the ex-depot price of petroleum products prices was caused by the exchange rate, as the rupee depreciated massively in the last fifteen days. The average exchange rate for the next fortnight review of prices has been estimated Rs298.18 against dollar compared to Rs288.25 against a dollar. This is an increase of Rs9.93. The rupee fell sharply in the last two weeks due to mounting pressure on account of imports.

As the prices of petroleum products are calculated on the average exchange rate of Pakistan State Oil (PSO), the tentative exchange rate for petrol has been estimated at Rs2/litre, whereas it has been estimated at Rs7/litre for high speed diesel.

If the government went with the massive increase in the prices of petroleum products in its next review, it would be the third consecutive major price hike of petroleum products.

On August 1, 2023, the government had raised the price of petrol by Rs19.95/litre and of high speed diesel by Rs19.90/litre. On August 16, 2023, the price of petrol price was raised by Rs17.50/litre and the price of high speed diesel was increased by Rs20/litre.