ISLAMABAD: To account for the rapidly fluctuating currency exchange rate and limit losses to oil marketing firms (OMCs) and refineries, the the government has decided in principle to amend the pricing structure for petroleum products and shorten its timeframe.
As on August 1, the government has also promised to raise OMCs’ profit margins on the sale of petroleum products to levels comparable to those of dealers, who have achieved increases of 43% on gasoline and 70% on high-speed diesel (HSD) to Rs7 per litre.To offset the impact of increasing taxes, OMCs have now increased their demands for margin at Rs9 per litre.
The issue of reducing price changes to a daily or weekly schedule rather than the current fortnightly one or allowing the industry to determine its own prices once the government fixes various levies at the beginning of each month is also on the policy agenda.
To prevent players in the market from engaging in disorderly pricing, the regulator would be requested to keep an eye on the pricing structure in the market based on predetermined parameters.
There had been “a pretty dramatic decrease in the exchange rate” just in the prior two weeks. On July 14, the exchange rate used to determine the preceding fortnightly pricing was Rs209.725 to the dollar. Ogra has set its tariffs at Rs236.0394 per dollar for first workweek of August (1-15) 2022.
It was tried to suggest during the meeting that the average interbank rate of the prior pricing period, as opposed to the rate of the last day as per the July 2020 pricing system, should be chosen to take for the purpose of price calculation.
This was done while reviewing the implications of the sharp exchange rate depreciation. The participants thought that doing this would mitigate the price effects of currency devaluation on petroleum products.
