- Ogra may propose higher petrol and diesel prices due to global oil price surge and rupee depreciation.
- Potential increase worries citizens, could worsen high inflation rate.
- Government faces dilemma between public concerns and IMF loan conditions.
Due to recent international oil price escalations and the rupee’s depreciation against the US dollar, the Oil and Gas Regulatory Authority (Ogra) is anticipated to propose a rise in petroleum rates for the upcoming two weeks. Reports indicate that petrol prices could climb by Rs12 per liter, while diesel might see a Rs14.83 per liter hike from September 1, 2023.
This potential surge in prices has raised concerns among the public, fearing a negative impact on the existing 28% inflation rate. A representative from the Energy Ministry expressed worry, stating that this move could exacerbate financial challenges for the population.
Given ongoing public protests against high electricity bills, the government could potentially opt to prevent the proposed price increase to alleviate citizen concerns. However, such a decision might place the caretaker government in a challenging position.
The official further noted, “If the government pursues this route, it may appear as if it’s not adhering to the conditions set by the IMF for the $3 billion standby agreement (SBA) loan, which mandate the passing on of petroleum price fluctuations.” At present, the interbank market values the US dollar at Rs301.75, with an approximate open market value of Rs319.
In August, petrol and diesel costs surged by Rs37.50 and Rs40 per liter, respectively. Previously, authorities calculated fuel rates based on a Rs287 exchange rate for the dollar. However, starting from September 1, 2023, the rate will shift to Rs299 due to the Rs12 exchange rate impact.