Rising rupee brings relief to fuel consumers

The government on Saturday slashed the prices of key petroleum products for July 16-31 fortnight on the back of strengthening of the rupee against the US dollar following approval of a new International Monetary Fund (IMF) deal.

Finance Minister Ishaq Dar announced a Rs9 per litre reduction in the price of petrol and Rs7 per litre in price of high speed diesel. The new prices would take effect on July 16 (today) and continue until July 31.

The rupee has appreciated by Rs 8.42 against the dollar climbing to Rs278.58 from Rs286.99 in the wake of the approval of IMF’s Stand-By Arrangement and fresh deposits from Saudi Arabia and the UAE in the state Bank of Pakistan (SBP).

Announcing the new fortnightly fuel prices on the state television on Saturday night, Dar said that the prime minister had issued directives for reducing the prices of petroleum products.

Accordingly, the petrol price has been reduced by Rs9 per litre to Rs253. Its price during the last fortnight was Rs262 per litre. Similarly, the price of high speed diesel declines by Rs7 to Rs253.50 per litre from Rs260.50 per litre.

The minister said that the international fuel market had been fluctuating during the outgoing fortnight – July 1-15. However, the government also withheld the decision of increasing petroleum development levy (PDL) for second half of July.

“There was an increase in one product and decline in the others,” the finance minister said. “But the strengthening of the rupee against the dollar has offset the price increase,” he added

The government was charging Rs55 per litre PDL on petrol and was scheduled to increase it to Rs60 per litre. As per the agreement with the IMF the first phase of the PDL was implemented on July 1.

However, Dar said, the second phase scheduled to be added to the fuel prices during the second fortnight of the month would not be implemented. “So now the PDL is not passed on to the consumers,” the finance minister said.

Petrol is used in motorbikes and cars and is an alternative to compressed natural gas (CNG) in the country. Since CNG is not available, especially in Punjab, therefore the demand for the petrol is high.

The price of high-speed diesel (HSD) was estimated to surge by Rs3.66 per litre in the second half of July but instead, the government slashed it as well. This downward fluctuation will have healthy impact on both consumers and industries.
High Speed diesel is used in transport and agriculture sectors. Therefore, any increase in its price has a direct inflationary impact on the lives of the masses.