Petrol price may fall by Rs2.86

While the price of petrol may come down given the fluctuating global oil prices, the price of high-speed diesel (HSD) is likely to go up for the next fortnight with effect from November 1, 2022. In line with the Platts Exchange Rates Methodology (PERM), the price of HSD may increase by Rs3.70 per litre while the price of petrol may come down by Rs2.86 per litre. The estimates are based on current government taxes and Pakistan State Oil (PSO) exchange loss adjustment.

PSO is seeking an exchange loss adjustment of Rs6 per litre in petrol and Rs5 per litre in HSD. These adjustments are being sought due to exchange rate variations in the import of petrol and HSD. HSD is used in the transport and agriculture sector, therefore, a revision in its price will have a direct impact on consumers. The proposed revisions are subject to no increase or decrease in GST imposition. Officials also stated that the government may increase tax on petrol and keep its price unchanged to generate more revenue on the sale of this product. The officials also indicated that the price of HSD may increase by around Rs3.70 per litre from Rs235.30 to Rs239 per litre.

In this calculation, the margin of Oil Marketing Companies (OMCs) and dealers, on the sale of petroleum products, will be Rs3.68 per litre for petrol and Rs7 per litre for HSD. In the last two weeks, the average exchange rate has been Rs220.58, which is down by Rs0.44 per litre as compared to Rs221.02 per litre during the last fortnight. As PSO imports petroleum products, the state-run oil marketing company is allowed exchange rate adjustments to save itself from losses.

In an attempt to minimise the impact of oil prices on the masses, the government devised a new formula to calculate the exchange rate for oil price revisions. Earlier, it took the exchange rate of the previous day. Under the revised formula, however, it is now taking the average exchange rate. On August 31, 2022, the last day on which the oil price revision was meant to be calculated, the exchange rate stood at Rs218.95. Instead, the government took an average exchange rate of Rs 217.81.