Petrol price may reduce by Rs10-15 per litre on rupee strength – Financeupdates

• The price of diesel may be slashed by Rs2 per litre.
• OGRA to meet for price revision for next fortnight.
• IMF reservations could cause hurdles in price cut.

KARACHI: The improvement in the exchange rate, mostly in the favour of local currency, is likely to bring the prices of petroleum products down in the next fortnightly review by the oil sector regulator.

The Oil and Gas Regulatory Authority (OGRA) will meet soon to revise the petroleum prices for the next fortnight starting October 16, 2022.

If the government decides to pass on this rupee-dollar parity impact to the end consumers, the price of petrol may be slashed by an estimated Rs10-15 per litre and that of diesel by Rs2 per litre, according to industry sources.

The rupee fell for the second straight session on Thursday as dollar demand from importers outpaced greenback sales by exporters, who chose to sit on the sidelines in anticipation of range-bound trading in the local currency going forward, dealers said.

However, the sources added that this facilitation could be delayed owing to International Monetary Fund’s (IMF) reservations over the petroleum subsidy as Pakistan had agreed with the lender of the last resort to gradually add Petroleum Development Levy (PDL) to the prices of fuels.

The addition of PDL will offset the exchange rate impact.

According to the working of the oil industry, all petroleum prices are showing a declining trend worldwide; however, it is not clear if the government would pass on the impact or offset it by raising taxation.

Oil prices traded about 2% higher on Thursday, reversing course, as low levels of diesel inventory ahead of winter helped investors shrug off higher-than-expected stocks of crude and gasoline.

Analysts say Finance Minister Ishaq Dar seems to be following a populist policy and may avoid burdening the masses further at least for now, doing good on the word that he gave before assuming the office of finance minister.

There’s a chance that the finance minister might pass the impact of a global downtrend and a stronger rupee if world markets continued to retreat.