Petrol, diesel likely to cross Rs300 mark for first time in country’s history

• At present the inflation rate is at 28%, says energy ministry official.
• Govt already under pressure due to power bills, says official.
• LC confirmation charges embedded in price of petroleum products.

ISLAMABAD: Amid a recent increase in global oil rates along with depreciation in the value of the rupee against the US dollar — which has impacted the exchange rate impact by Rs12 — Oil and Gas Regulatory Authority (Ogra) is likely to recommend a hike in the petroleum products prices for the next fortnight, The News reported Tuesday.

It is likely that the price of petrol will go up by Rs12 per litre, while diesel will see a rise of Rs14.83 per litre from September 1, 2023.

“This would expose the masses to a further surge in inflation making the lives of the masses more miserable. At present the inflation rate is at 28%,” a senior official of the Energy Ministry told The News. 

“However, the government which is already under tremendous pressure because of the countrywide protests over the inflated electricity bills, may reduce the increase or stop it," the official added.

But doing so would put the caretaker government in a tight spot.

"If the government does that it would be considered that the caretaker government has defaulted on the IMF terms and conditions for its $3 billion standby agreement (SBA) loan under which the government is bound to pass fluctuation in prices of the POL products. 

The dollar’s value has reached Rs301.75 in the interbank while it is selling at around Rs319 in the open market,” the official said.

As per the data, over the month of August, petrol prices have already increased by Rs37.50 while diesel has gone up by Rs40 per litre. 

"However, the authorities last time worked out the POL prices at the value of the dollar at Rs287 and now they have decided to calculate the prices of POL products from September 1, 2023, at Rs299. 

"The big impact of the exchange rate of Rs12 will be reflected in the hike in POL prices.

"The LC confirmation charges that have increased by 10% are also embedded in the price of PSO petroleum products," the Energy Ministry official told The News. 

"The existing price of Mogas stands at Rs290.45 per litre which may go up by Rs12 per litre to Rs Rs302.45 per litre. Likewise, the HSD price which stands at Rs293.40 per litre is also likely to increase by Rs14.83 per litre to Rs308.23 per litre."

Diesel price is highly inflationary as it is mostly used in heavy transport vehicles, trains and agricultural engines like trucks, buses, tractors, tube wells and threshers and particularly adds to the cost of vegetables and other eatables. 

On the other hand, petrol is also mostly used in private transport, small vehicles, rickshaws and two-wheelers and directly affects the budget of middle and lower-middle-class citizens.