Following a sharp decline in the value of the rupee and the anticipated implementation of a sales tax on petroleum goods, Pakistan’s new petrol price may increase to PKR 309 per litre.
Petrol Prices Analysis
Fahad Rauf, Head of Equity Research at Ismail Iqbal Securities, provided a scenario of petrol prices after new exchange rate and with or without application of sales tax on petroleum goods based on study of predicted petroleum prices after altering exchange rate scenario.
According to his estimate, after taking into account current international pricing and dollar/rupee, petroleum levy, and sales tax imposition, the petrol tariff may be hiked by 44% to PKR 309 per litre from the present PKR 215 per litre.
The price of fuel might also increase by 50% in the similar scenario, from PKR 228 to PKR 341.
With the most recent drop in the value of the rupee, Rauf also determines the cost of petroleum products.
In his opinion, the price of gasoline might increase by 23 percent to PKR 264 per litre from the present PKR 215 per litre, taking into account current international pricing and the dollar/rupee, petroleum levy, but excluding the introduction of sales tax.
Similarly, the price of diesel may increase in the similar situation by 28%, from the current PKR 228 per litre to PKR 291 per litre.
The analyst’s estimate of petroleum costs is based on the exchange rate as of January 26, 2023, when the rupee posted a historic one-day loss of PKR 24.54 and hit a record low against the dollar of 255.43.
However, on January 27, 2023, the rupee hit a new historic low against the dollar in the interbank foreign currency market, falling to PKR 268.60.
The nation analyses the cost of fuel every two weeks, and the next assessment is slated for January 31, 2023.
Prices, however, might increase prior to the announcement date if the government imposes a sales tax or other levy via an ordinance.
According to reports, in order to meet the IMF’s demand for an additional PKR 280–300 billion, the government intends to adopt a micro budget.
To read our blog on “Pakistan’s petroleum imports fell more than 8% in 1st half of FY23,” click here.
