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Govt likely to maintain status quo on petrol, diesel prices despite decline in global rates

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  • Petrol, diesel prices recorded significant decline in global market. 
  • Average price of diesel fell to around $100 per barrel globally.
  • Price of petrol dropped to $90 per barrel for next review.

KARACHI: Despite a major reduction in the international prices of diesel and petrol, the government has decided not to decrease the prices for local consumers to adjust the previous exchange losses as well as to raise taxation on the fuels, The News reported citing sources. 

The petrol and diesel prices in the global market have recorded a significant decline and average fortnight prices of both products would be taken for the next price revision on February 28, 2023.

According to the oil industry sources, the average price of diesel for the next fortnightly review dropped by $7 per barrel, which in terms of the Pakistani rupee comes to a Rs30 per litre reduction for the domestic price of diesel. The average price of diesel in the global market fell to around $100 per barrel compared to $107 per barrel in the previous fortnight.

The average price of petrol dropped to $90 per barrel for the next review of prices compared to $93 per barrel in the last fortnightly review of prices, translating into a Rs10 per litre reduction for the consumers in the local market.

Sources pointed out that rupee appreciation against the dollar in the last two weeks also helped cut the import price of diesel and petrol, as the average exchange rate dropped by Rs8 for the next review of prices.

Oil industry sources were however not hopeful about any major reduction in the prices of diesel and petrol for domestic consumers as the government was expected to adjust the exchange losses, which it did not pass on fully to the oil sector in the last many reviews.

For instance, an exchange loss adjustment of Rs88 per litre was due on diesel, but the government only transferred Rs12 per litre on this head, while the remaining was still to be adjusted. 

“It is likely that the government would pass on partially the adjustment because of getting space on the exchange rate side,” sources said.

Likewise, an exchange loss adjustment of Rs34 per litre was due on petrol, but the government only gave Rs12 per litre to the oil industry.

Sources said that under the conditions put down by the International Monetary Fund (IMF), the government might increase the petroleum levy (PL) on diesel to Rs50 per litre as it has now got room to do it. Currently, it is Rs40 per litre on diesel.

Sources expect a Rs10 per litre cut in diesel if the government does not impose GST, which otherwise would deprive the local consumers of the drop in diesel prices in the global market.

Official industry sources do not expect any reduction in the price of petrol for the local consumers, which otherwise would have been down by Rs10 as per the trends of its price in the global market.

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ECC Convenes in Islamabad: Forum Sanctions Spa Agreement Between PSO and SOCAR Azerbaijan

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Pakistan State Oil and SOCAR Azerbaijan have signed a sale purchase agreement for the delivery of petroleum products, which has been approved by the Cabinet’s Economic Coordination Committee.

The Finance Minister Muhammad Aurangzeb chaired the ECC meeting in Islamabad, where the permission to this effect was granted.

The Ministry of Energy’s Circular Debt Management Plan for FY 2024–2025 was also authorized by the conference. Its goals are to improve financial sustainability and lower liabilities in the power industry.

The committee examined the situation with the increase in prices for chicken and pulses. In order to offer the general public with relief as soon as possible, it expressed worry about the situation and requested that the National Price Monitoring Committee keep an eye on it in cooperation with the Ministry of National Food Security and Research and the Provincial Administration.

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Pakistan has reduced its policy rate to an all-time high.

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There has been a significant decrease in the policy interest rate that Pakistan has implemented. The country’s central bank made the announcement on Monday that it will be lowering interest rates by 250 basis points, bringing them down to 15 percent. This was a record-breaking reduction in Pakistan’s policy rate, which was done with the intention of bolstering the economy, which had been struggling.

Following a significant decrease in Pakistan’s inflation rate, the central bank made this move. It was anticipated in a poll conducted by Reuters that policy rates would be reduced by 200 basis points. There was a forty percent increase in the country’s inflation rate in May 2023, however it has since decreased to seven point two percent in October. The Ministry of Finance anticipates that inflation will continue to decline, reaching a level of between 5.5 and 6.5 percent in the month of November.

Earlier, Pakistan had reduced the policy rate by 700 basis points over the course of four separate measures beginning in June of last year. The economy of Pakistan has been in a precarious situation for a considerable amount of time. The majority of economists are of the opinion that falling interest rates is essential in order to stimulate economic expansion.

By stating that the existing monetary policy will assist stabilize commodity prices and keep inflation between 5 and 7 percent, the State Bank of Pakistan expressed its support for a reduction in interest rates. In addition to contributing to the preservation of macroeconomic stability, it will also contribute to the achievement of economic growth on a sustainable basis.

Jameel Ahmad, the Governor of the Central Bank, informed analysts at a briefing that Pakistan’s bilateral partner countries have promised the International Monetary Fund (IMF) of continuing support for the duration of their current financial recovery program. This announcement was made in conjunction with the announcement of the policy rate decline.

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The stock market rises to all-time highs and crosses the 92,000-point mark.

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The primary index hit the crucial 92,000-point benchmark as the stock market soared to new all-time highs.

A significant increase was made by the hundred-index, which closed at 92,351 points after rising 414 points.

According to analysts, this increase is the result of a resurgence of investor confidence, which has been supported by strong mood in international markets and solid economic indications.

With predictions for more increase as market stability improves, the most recent surge highlights a robust recovery trend.

The market fell from previous record highs due to selling pressure, causing the Pakistan Stock Exchange to see a steep dip earlier today.

The benchmark 100-index ended the trading session down after originally rising 572 points to an all-time high of 92,514 points.

The market finished the day at 91,660 points, down 278 points, unable to hold the 92,000-point threshold after hitting spectacular highs.

Analysts point to investor profit-taking as a contributing factor in the decline, indicating a cautious attitude in the market following recent advances. The market is becoming more volatile, and investors are paying close attention to patterns.

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