Government Announces Petroleum Prices; Diesel Costs Increase
ISLAMABAD: The federal government has announced that petroleum prices will be maintained at their current rate of Rs262 per litre, while diesel costs have been raised by Rs7.5 to a rate of Rs260.5 per litre.
Finance Minister’s Announcement
Finance Minister Ishaq Dar shared the news in a tweet late last night, stating that the newly announced rates would be valid until July 15. The decision was made on the recommendation of the Oil and Gas Regulatory Authority (OGRA), it was claimed.
Reason for Diesel Price Increase
Dar has said that the price of oil has increased significantly in the world market due to which the price of diesel is being increased by seven and a half rupees per litre.
No Clarity on Kerosene and Light-Diesel Oil Prices
However, the finance minister did not clarify whether there were any changes in kerosene and light-diesel oil prices.
Recommendation by OGRA
He said that OGRA had recommended keeping the prices to a minimum, which was decided after consultation with the prime minister.
Anticipation of Relief for Consumers
Earlier, Ogra had sent the summary of the prices of petroleum products for the next fortnight to the finance ministry. It was anticipated that the government would give relief to the people.
Petrol Prices to Remain Unchanged
On June 15, the government had announced that the prices of petroleum products would remain unchanged for the next 15 days.
Impact on Consumers
However, Pakistan’s oil consumers were expected to get a relief of Rs6.48 per litre in the price of petrol for the first fortnight of July. It was also anticipated that the price of high-speed diesel (HSD) may surge by Rs13.84 per litre, which would have widely impacted its consumers as HSD is primarily used in transport and agriculture sectors.
Inflationary Pressures and Relief for Motorists
Any upward revision in the price of diesel sparks inflationary pressures owing to the increase in freight rates for goods transportation and rise in the cost of planting crops. On the other hand, the expected reduction in the price of petrol, which is considered an alternative to compressed natural gas (CNG), was expected to provide some relief to the motorists and bikers.
Dependency on Petrol
With the failure of Pakistan LNG Limited (PLL) to clinch import contracts, the provision of LNG to the CNG retail outlets, especially in Punjab, has encountered obstacles. Therefore, car owners are mainly dependent on petrol.
Factors Influencing Prices
Industry sources had indicated that the proposed changes in petrol and diesel prices are based on current rates of petroleum levy and general sales tax (GST). The petroleum levy has been fixed at Rs50 per litre for both petrol and HSD.
Global Oil Market Situation
Earlier this week, oil fell, giving up earlier gains, as worries over further interest rate hikes and slowing demand offset support from an industry report showing a larger-than-expected drop in US crude inventories. Benchmark Brent crude prices are down over 15% this year as rising interest rates hit investor appetite, while China’s economic recovery has faltered after several months of softer-than-expected consumption and other data. At 1348 GMT, Brent was down 43 cents, or 0.6%, to $71.83 a barrel, while US WTI crude slipped 12 cents, or 0.2%, to $67.58. “For now, the market remains stuck with demand concerns weighing,” said Ole Hansen, head of commodity strategy at Saxo Bank. “OPEC production cuts have helped prevent a deeper setback.”
Concerns Raised by OCAC
Meanwhile, the Oil Companies Advisory Council (OCAC) has cautioned the government that imports on foreign suppliers’ account through the customs bonded storages pose a significant threat to the local refineries, leading to potential economic repercussions not only within the oil industry but also for the overall economy.
