The government may increase the price of gasoline by Rs20 per liter from February 15, 2023.
According to oil industry insiders, the latest gasoline price increase was based on international gasoline pricing calculations, i.e., on a Free on Board (FOB) basis.
During the recent biweekly gasoline price review, the government imposed a significant rise of Rs35 per liter and already charged Rs50 per liter for Petroleum Duty (PL). However, the General Sales Tax (GST) has not yet been implemented.
The price of gasoline could increase more if the exchange rate is altered in the next price adjustment. They further asserted that the higher exchange rate would deprive local customers of any benefits or price reductions on petroleum products. However, the steep depreciation of the rupee vs. the dollar undermined revenues to the detriment of home consumers.
The price of gasoline could increase by a further Rs20 per liter if the government also adjusts for the exchange rate, bringing the total price to Rs40 per liter, according to the sources.
In contrast, the diesel price did not reflect an increase in FOB without an exchange rate adjustment. If the exchange rate is altered, according to the sources, diesel prices could increase in the next revision. Due to the currency rate, the government changed the diesel price by Rs14 per liter; nevertheless, the quick gain of the dollar destroyed the exchange rate adjustment of the previous revision.
They stated that diesel prices on the global market have dropped by five to six dollars per barrel. Still, the devaluation of the rupee has hindered the government from passing these savings to domestic consumers.
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