Government now has room to lower the price of gasoline by at least PKR. 18 per litre
In light of the recent drop in international oil prices, FPCCI President Irfan Iqbal Sheikh has urged that the government promptly pass the savings on to businesses and consumers. In light of lower-than-anticipated demand from the US and China, and with more countries choosing Russian oil, it is essential to note that international oil prices have been falling steadily over the past few weeks.
According to industry estimations, demand markers, and trend research, Irfan Iqbal Sheikh stated that international oil prices are currently around $73 per barrel and may even decrease to $70 in a few days. He brought up the fact that $78-$80 per barrel was the worldwide crude oil price range the last time petrol prices were set.
Sheikh explained that the government now has room to lower the price of gasoline by at least PKR. 18 per litre due to the over 5% decline in oil prices. He also insisted that the government quickly pass on any decreases in oil costs to the public, just as it does when oil prices go up.
The FPCCI chief voiced his concerns over reports from reputable media sites that OGRA wants the government to decrease gas prices by only a fraction of what the decline in worldwide oil prices can translate into. Since the government has abandoned its original proposal to provide petrol subsidies to economically disadvantaged groups in response to intense pressure from the IMF, it is more important than ever that the entire benefit be immediately passed on to consumers.
Irfan Iqbal Sheikh stated that the PDL is a fixed fee per litre rather than a percentage of the price, therefore passing on the whole benefit to the people will not influence any of the IMF conditions or the budget-making exercise.
Even more concerning to him is the fact that the government has already amassed PKR. 800 billion from the petroleum development levy (PDL) and whatever else it plans to make from petroleum products in the outgoing fiscal year.
Irfan Iqbal Sheikh emphasized that just one, well-timed action can halt the growth of inflationary pressures and buy some time. According to government projections, inflation is expected to stay at least 21% in FY24, significantly worsening economic conditions and the cost of doing business.
Irfan Iqbal Sheikh further noted that the first shipment of Russian oil is likely later this month or early next month, giving the government another chance to gradually lower petroleum costs across the country. For the same reason, he suggested gradually increasing our orders of Russian crude to raise the proportion of Russian oil in our crude mix and so reduce overall costs.
Irfan Iqbal Sheikh said the four reasons why the business community has backed the government’s late but proper decision to acquire Russian crude: (i) it can be up to 30 percent cheaper than the international market (ii) import payments will be made in Chinese Yuan instead of dollars, which will help stabilize Pak Rupee (iii) after the teething problems are solved regarding shipping and payments, even more, competitive prices may be obtained, and, as a result, larger orders can be placed (iv) the idle capacity of three large Pakistani oil refineries that can refine Russian crude will be put to productive use, which will contribute to the economy.