- Diesel prices may be reduced by Rs2 per litre.
- The OGRA will meet in the next two weeks to discuss pricing increases.
- IMF misgivings might stymie price cuts.
KARACHI: The improvement in the exchange rate, mostly in favour of local currency, is expected to lower petroleum product prices in the next weekly review by the oil sector regulator.
The Oil and Gas Regulatory Authority (OGRA) will convene shortly to modify petroleum prices for the following two weeks, beginning October 16, 2022.
According to industry insiders, if the government chooses to pass on the rupee-dollar parity effect to end customers, the price of petrol might be reduced by Rs10-15 per litre and diesel by Rs2 per litre.
The rupee fell for the second consecutive session on Thursday as dollar demand from importers outpaced dollar sales by exporters, who preferred to wait on the sidelines in expectation of range-bound trading in the local currency in the future, according to dealers.
According to the sources, this facilitation may be delayed due to the International Monetary Fund’s (IMF) misgivings over the petroleum subsidy, since Pakistan had agreed with the lender of last resort to progressively add the Petroleum Development Levy (PDL) to gasoline prices.
The addition of PDL will offset the effect of the exchange rate.
According to the workings of the oil sector, all petroleum prices are decreasing globally; however, it is unclear if the government will pass on the effect or counteract it by boosting taxes.
Oil prices rose around 2% on Thursday, reversing direction, as low diesel inventories ahead of winter helped investors shrug off higher-than-expected crude and gasoline supplies.
Analysts believe Finance Minister Ishaq Dar seems to be adopting a populist approach and may avoid burdening the populace more for the time being, fulfilling a promise he made before taking office.
If global markets continue to fall, the finance minister may pass the impact of a worldwide decline and a higher currency.
