ISLAMABAD: As the maximum petroleum levy (PL) on petrol can not exceed Rs 60 per litre without parliamentary approval, the state-owned Pakistan State Oil (PSO) was allowed a downward rupee exchange rate adjustment of Rs 3.21 per litre with effect from December 1-15, 2023.
The rupee was allowed to depreciate by Rs 10.96per dollar for PSO on November 16, 2023 and was raised by Rs 3.21 per litre for the first half of December.
On November 16, 2023, Oil Marketing Association of Pakistan (OMAP) expressed serious concern at the calculation of the exchange rate for petroleum imports. In a letter to the secretary Ministry of Energy Petroleum Division, the association requested the government for a comprehensive review of the existing formula for calculating the exchange rate to save the private sector from substantial losses.
The association refused to accept PSOs exchange rate to determine domestic prices of petroleum products. The interim government kept petrol prices unchanged for the first half of December despite Rs 10.70 per litre reduction in average Platts (a price benchmark service for the oil industry) with incidentals and duty to Rs 198.67 on December 1, 2023 from Rs 209.38 per litre on November 16, 2023.
The Inland Freight Equalisation Margin (IFEM) on petrol has been cut by Rs 3.47 per litre to Rs 2.95 per litre for prices effective 1st December against Rs 6.42 litre on 16 November and the amount adjusted in ex-refinery price through a raise from Rs 198.41 to Rs 201.88 per litre.
On June 12, 2023, Ministry of Finance’s proposal to transfer the power of fixing the PL from parliament to the Cabinet was rejected by Senate Standing Committee on Finance.
However, at the end of its tenure, the PDM coalition government extended the services contract of Member (Oil) Oil and Gas Regulatory Authority (OGRA) for four years instead of hiring the services via competition.
Copyright Business Recorder, 2023