LAHORE: Pakistanis may soon experience a massive uptick in petroleum prices later this week due to currency fluctuation and changing global crude rates.
As per reports, petrol and high-speed diesel (HSD) prices could escalate Rs10-14 and Rs14-16 per litre, respectively, for the next fortnight of September. Kerosene prices are also expected to see an increase of Rs10 per litre due to existing tax rates and import parity prices.
During the first ten days of September, the Pakistani rupee experienced a free fall in open market by depreciating to a historical low of Rs325 against the US dollar. The local currency depreciated by Rs 4.5, moving from Rs299 to Rs304 in the interbank market, before subsequently stabilizing below the Rs300 mark. Meanwhile, benchmark international Brent prices rose to over $92 per barrel in the second week of September, compared to $88 in the first week of the same month, which has impacted the overall price dynamics.
In addition to these factors, the government plans to pass on to consumers approximately Rs 0.88 per litre impact from the recently approved increase in sale margins for petroleum dealers and oil marketing companies (OMCs) by the Economic Coordination Committee (ECC) of the cabinet last week.
Based on Pakistan State Oil’s (PSO) product imports, the import parity prices for petrol had increased by Rs13, for diesel Rs14, and for kerosene oil Rs10 per litre, since September 1. However, retail prices are estimated to rise by Rs13 per litre for petrol, Rs16 for diesel and Rs10 for kerosene. Jet fuels are also expected to become somewhat costlier, with an increase of Rs10 per litre.
As a result, petrol and diesel rates may exceed Rs320 and Rs325 per litre, respectively, while kerosene prices could approach the higher end of the Rs240 per litre with effect from September 16, 2023.
This potential increase in petroleum product prices follows a notable 27.4% rise in the August inflation rate, which may have a delayed effect on general prices in Pakistan in the coming weeks.
Currently, there is zero general sales tax (GST) applied to all petroleum products. However, the government imposes a petroleum development levy (PDL) of Rs60 per litre on petrol, as well as Rs50 each on HSD and high octane blending component and 95RON petrol to meet one of the condition of the IMF. Additionally, customs duties ranging from about Rs18 to Rs22 per litre are applied to petrol and HSD.
