Due to higher global oil prices, Pakistan’s government intends to increase petroleum product prices by Rs10 to 14 per liter for the upcoming fortnight.
Industry insiders suggest that the government may cite escalating oil prices in international markets as the reason for the potential hike. If the government also accounts for exchange rate losses, the increase could reach Rs14 per liter.
In the country’s oil sector calculations, the ex-depot petrol price is projected to be Rs14.77 per liter for the next review, with the exchange rate loss adjustment. The current ex-depot petrol price is Rs272 per liter, which could increase to Rs286.77 per liter if the government passes on the impact of global oil prices and exchange rate losses.
Even without adjusting for exchange losses, petrol prices will likely rise due to higher global oil prices. The anticipated increase is based on the current tax rates. The government currently imposes an Rs50 per liter levy on petrol with no general sales tax.
The expected petrol price increase is based on an Rs5 per liter exchange loss adjustment owed to the Pakistan State Oil (PSO) by the government, as it previously did not include exchange rate adjustments to maintain lower petrol prices. The POL prices would have been higher following the significant depreciation of the rupee against the dollar in the past two and a half months under IMF conditions that permitted a market-based exchange rate.
