Oil prices may be jacked up slightly

The government is likely to slightly increase prices of petroleum products to collect more revenue from oil consumers in the next fortnight from November 16 to 30, 2022.

“Prices of petroleum products may be increased by Rs3 to Rs4 per litre,” an official of the Petroleum Division said.

He added that the government was expected to adjust taxes on petroleum products to increase revenue collection in line with the commitment to the International Monetary Fund (IMF). It has already raised the petroleum levy on petrol and high octane blending component (HOBC) to Rs50 per litre in an effort to boost revenue receipts.

The petroleum levy on the two oil products is at a record high, however, the general sales tax on petroleum products has been kept at zero.

Sources in the petroleum sector said that ex-refinery prices of oil products may go down slightly for the upcoming fortnight. Petrol price may fall by around Rs1.6 per litre and high-speed diesel (HSD) rate by Rs3 per litre, they said, adding, however, that those prices did not reflect any exchange rate loss adjustment. Therefore, there may be addition of about Rs4 to the per-litre price of HSD as the government skipped it last time.

Also, they pointed out, there was a negative Inland Freight Equalisation Margin (IFEM) of about Rs5 per litre for HSD consumers in the previous oil price revision, but it was expected to become positive in the fresh price announcement.

Apart from these, the price revision also depends on changes in the petroleum levy on HSD and imposition of general sales tax on both petrol and HSD.

Earlier, the oil prices had been kept unchanged for the November 1-15 fortnight.

In line with the Platts trading platform and exchange rate movement, the petrol price had been estimated to drop by Rs2.86 per litre while the HSD price was supposed to rise by Rs3.70 per litre for the first fortnight of November. However, the government denied consumers a relief in the petrol price.

At present, the HSD price stands at Rs235.30 per litre and petrol costs Rs224.80 per litre. Kerosene oil rate is Rs191.83 per litre while light diesel oil fetches Rs186.50 per litre.

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