The Oil and Gas Regulatory Authority (Ogra) is contemplating recommending an increase in petroleum product prices following a global surge in oil rates and a decline in the rupee’s value against the US dollar, which shifted the exchange rate by Rs12. Starting September 1, 2023, petrol might see a price hike of Rs12 per litre, and diesel could rise by Rs14.83 per litre.
The Energy Ministry’s senior official expressed concerns about this development, stating it would further drive inflation to 28%. Given the ongoing public protests over high electricity costs, the government may reconsider the magnitude of the increase. Still, such an action could jeopardize its $3 billion Standby Agreement (SBA) with the IMF, which mandates reflecting price fluctuations in POL products.
Recent data reveals that, over August, petrol and diesel prices have risen by Rs37.50 and Rs40 per litre, respectively. However, the previous POL prices were determined at the dollar value of Rs287. For September 1, 2023, this rate will be recalibrated to Rs299, with the Rs12 differential influencing the POL price increase. Additionally, a 10% surge in LC confirmation charges is now included in the PSO petroleum product prices.
The current price of Mogas is Rs290.45 per litre, likely to increase to Rs302.45, while the HSD might go from Rs293.40 to Rs308.23 per litre. Diesel’s price directly impacts transport and agricultural costs, thereby affecting food prices. Petrol rate influences private transport expenses, affecting middle and lower-middle-class budgets.