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Petrol price may increase by Rs20 from Feb 16

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  • Next petrol price review due on Feb 15.
  • PDL may also be increased on diesel.
  • Sharp increase in POL prices is expected.

KARACHI: The prices of petrol may witness a surge of Rs20 per litre in the next two weeks’ review — which is to be held on February 15, 2023, The News reported on Tuesday.

This recent uptick in petrol price was based on the calculations of the international price of petrol i.e. free on board (FOB) basis, oil industry sources told the publication. 

The government had carried out a massive increase of Rs35 per litre in the last fortnightly review of fuel prices. Currently, the government is charging Rs50 per litre petroleum levy (PL) whereas general sales tax (GST) has not been imposed yet.

The price of petrol may further increase provided the foreign exchange rate was adjusted in the next review, the sources mentioned.

They further said that the exchange rate was on the higher side, which would deprive the local consumers of any benefit or reduction in the prices of petroleum products. 

The prices of petrol in the international market have decreased, but the steep depreciation of the rupee against the dollar has eroded the gains to detriment of domestic consumers.

The sources also added that the petrol price might go up even further if the government adjusted Rs20 per litre on account of the exchange rate as well, which would cumulatively take the price by up to Rs40 per litre. 

On the other hand, diesel price was not reflecting any increase on FOB sans exchange rate adjustment. The sources said that if the exchange rate was adjusted, diesel prices could go up in the next review.

The government had adjusted Rs14 per litre on diesel on account of the exchange rate; however, the steep appreciation of the dollar has eaten up the exchange rate adjustment of the last review.

They noted that diesel prices went down by five to six dollars per barrel in the global market, but rupee depreciation would not allow the government to pass on this reduction in global prices to local consumers. 

The last increase in prices of petroleum products was made in the review on January 29, 2021, by the federal government. After the review, petrol price was tagged at Rs249.80 per litre; high-speed diesel Rs262.80 per litre; kerosene oil Rs189.83 per litre; and light-speed diesel Rs187 per litre.

On January 29, 2023, the government increased the prices of petrol and high-speed diesel by Rs35 per litre each and the rates of kerosene oil and light diesel oil were increased by Rs18 per litre each.

Pakistan is currently facing a short supply of petrol, with its most populous province, Punjab bearing the brunt of the crisis. Major and smaller cities, towns and villages in Punjab do not have the fuel, which was also being blamed on petroleum dealers.

Last week, sources had said that other than the low import of petrol by a majority of Oil Marketing Companies (OMCs), petroleum dealers were having a field day and were involved in the hoarding of petrol in view of the expected increase in prices by mid-February.

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The cost of a liter of petroleum increased by much to Rs 8.14.

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Prices for gasoline and high-speed diesel were raised by the government on Monday by Rs4.53 and Rs8.14, respectively, for the upcoming two weeks.

In relation to this, the ministry of finance released a notice.

Diesel now costs Rs 290.38 per litre, while petrol is now priced at Rs 293.94 per liter following the most recent increase.

Additionally, light diesel cost Rs6.54 more per litre, to Rs174.34. A 6.69% increase in price to Rs193.8 per liter was made for kerosene oil.

The impact of the developing Middle East situation and the expanding global market are the main factors contributing to the transformation.

Before the most recent spike, the price of gasoline and HSD had risen by almost $4 and $4.50 per barrel, respectively, on the global market during the previous two weeks.

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Finance Minister Aurangzeb claims that Pakistan and the IMF are talking about a new multibillion-dollar initiative.

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The South Asian country is drawing to a close a $3 billion loan program with the International Monetary Fund that lasted nine months and was intended to address a balance-of-payments crisis that had put it in danger of defaulting last summer.

Pakistan has started negotiations for a new multi-year IMF loan program for “billions” of dollars, Finance Minister Muhammad Aurangzeb said in a Washington interview, with the final $1.1 billion tranche of that arrangement likely to be approved later this month.

Aurangzeb, a former banker who started his job last month, stated, “The market confidence, the market sentiment is in much, much better shape this fiscal year.”

“We really started talking with the Fund this week to get into a larger and longer program for that reason,” he continued.

A representative for the IMF informed AFP that the organization is “currently focused on the completion of the current Stand-by Agreement program,” which is a nine-month program that is expected to be finished soon.

The spokesperson went on, “The Fund staff is prepared to start initial talks on a successor program as the new government has expressed interest in a new program.”

“Third-year curriculum”
Aurangzeb’s journey to Washington will also include attendance at the IMF and World Bank’s spring meetings, which begin in earnest on Tuesday and have two distinct goals: supporting the world’s most indebted countries and aiding governments in the fight against climate change.

The IMF’s revised World Economic Outlook will be released to coincide with the start of the meetings, which bring together academics, representatives from the private sector, civil society, finance and development ministries, and central bankers to debate the state of the global economy.

Allegations of election tampering plagued Pakistan’s February 2019 elections, resulting in the imprisonment and disqualification of opposition leader Imran Khan and the persecution of his Pakistan Tehreek-e-Insaf (PTI) party.

The unstable alliance that surfaced, headed by Shehbaz Sharif, is currently charged with bringing about an economic recovery through the imposition of several controversial austerity measures.

Aurangzeb stated, “I do believe that we will be requesting for a three year program.” “Because in my opinion, that is what we need to help carry out the structural reform agenda.”

He went on, “I do think we’ll start getting into the contours of that discussion by the time we get to the second or third week of May.”

Keeping the US-China rivalry in check
Pakistan is in a difficult situation as the two nations have started an expensive trade war because of its strong economic ties to both China and the United States.

When asked how the Sharif government intends to handle its commercial relationships with the two largest economies in the world, Aurangzeb responded, “From our perspective it has to be a and-and discussion.”

“The United States is our biggest trading partner, and it has consistently provided us with support and assistance with our investments,” he stated. Therefore, that relationship will always be extremely important to Pakistan.

He was alluding to the nearly 1,860-mile-long China-Pakistan Economic Corridor, which was built to offer China access to the Arabian Sea, when he added, “On the other side, a lot of investment, especially in infrastructure, came through CPEC.”

According to Aurangzeb, Pakistan has a “very good opportunity” to participate in the trade war on par with nations like Vietnam, whose exports to the US have increased significantly as a result of tariffs placed on some Chinese items.

He stated, “We already have a few examples of that working.” “However, we must truly scale it up.”

reform initiative

Pakistan is currently engaged in a privatization campaign to sell off its underperforming state-owned businesses (SOEs) as part of the structural reform package agreed upon by the previous government.

The nation’s flag carrier, Pakistan International Airlines, is the first SOE on the list.

In regards to potential bidder interest, Aurangzeb stated, “we will find out in the next month or so.”

He said, “Our goal is to proceed with that privatization and see it through to completion by the end of June.”

Other businesses may soon follow if the government’s privatization of the PIA proceeds smoothly.

He declared, “We’re building a whole pipeline,” and added, “We want to really accelerate that over the next couple of years.”

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Owners of oil tankers stop the provision of fuel in favour of their demands.

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The Association declared on Monday that, in response to what it deemed to be an “unfair” measurement by the relevant authorities, gasoline delivery will stay suspended as of Tuesday.

According to the Oil Tankers Owners’ Association, they attempted to resolve their complaints with Deputy Commissioner Islamabad and Pakistan State Oil (PSO), but to no effect.

The Oil Tankers Owners Association has yelled slogans in support of their demand while parking their containers in the PSO depot.

The owners of oil tankers declared that they would not end their strike until their demands were met, accusing the administration of being to blame for the fuel crisis.

The association requested that the authorities abide by their requests, which included filling under a metered system. It further stated that the deal reached on February 20 had been broken by the authorities.

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