ISLAMABAD: Petrol prices in Pakistan may go up from March 16, 2023 owing for significant depreciation in local currency.

The country is scheduled to announce the petroleum prices on March 15, 2023 for next fortnight (March 16 – 31).

The ongoing decline in the value of the rupee has increased the likelihood of another increase in petroleum prices over the next two weeks.

Read: Petrol price in Pakistan – 16 March 2023

The local currency has dropped significantly over the last year. The rupee’s depreciation against the dollar rendered the local currency the worst in the region. The rupee has fallen by 57% in the last year, to PKR 280.77 to the dollar on March 10, 2023, from PKR 178.63 on March 10, 2022 in the interbank foreign exchange market.

On the other hand, crude oil prices in the international market fell precipitously. Despite the Russia-Ukraine conflict, benchmark Brent crude oil prices fell by around 30% in a year. Brent crude oil prices were $115 per barrel in March 2022 and have since dropped to $83 in March 2023.

In contrast, domestic prices of petrol and high-speed diesel (HSD) increased by 78% and 94%, respectively, on a year-on-year (YoY) basis by the week ended March 9, 2023.

The comparison of global and domestic fuel prices showed the local market should have lower prices and people of the country would have been provided relief.

However, the ill-conceived policies of the government for making a successful IMF deal resulted in disaster for the country. The IMF deal cost the nation with massive depreciation of the local currency and immense increase in energy prices, which made the life miserable.

Since Pakistan is net importer of petroleum products. The sharp rise in dollar value adversely affected the import bill in terms of rupee, which subsequently passed on to end consumers.

The import bill of petroleum group recorded a decline of 9.27 per cent to $10.61 billion during first eight months (July – January) 2022-2023 as compared with $11.69 billion in the corresponding months of the last fiscal year.

The massive depreciation in rupee value, the import bill in rupee terms recorded an increase of 19.55 per cent to PKR 2.38 trillion during the period under review as compared with PKR 1.99 trillion in the same period of the last fiscal year.

On one hand the rupee was causing huge price inflation and other hand the government in order to get IMF program further burden the oil prices with implementation of petroleum levy.

On the other hand, crude oil prices in the international market fell precipitously. Despite the Russia-Ukraine conflict, benchmark Brent crude oil prices fell by around 30% in a year. Brent crude oil prices were $115 per barrel in March 2022 and have since dropped to $83 in March 2023.

In contrast, domestic prices of petrol and high-speed diesel (HSD) increased by 78% and 94%, respectively, on a year-on-year (YoY) basis by the week ended March 9, 2023.