KARACHI: The Ministry of Finance is anticipated to raise the price of petroleum in the upcoming biweekly review, according to The News on Saturday, in keeping with the government's goal to win over the International Monetary Fund (IMF).

It should be noted that the sharp decline in the value of the rupee relative to the US dollar over the past two days would not have a significant impact on the review due on January 31 (Tuesday), as the average exchange rate would be Rs240, according to data gathered from the nation's oil sector.

However, it was discovered that a considerable increase in domestic petroleum costs as a result of rupee depreciation would be reflected in the fortnightly review that was due on February 15.

On February 15, when the dollar rate calculation would start at Rs260, the revision of gasoline prices will take this significant rise of the dollar against the rupee into account, according to knowledgeable individuals in the oil business.

Free on board (FOB) prices will result in a significant increase in the price of fuel and gasoline in the subsequent fortnightly review the following week.

According to sources with knowledge of the situation, using FOB would likely result in a 25 rupee increase in the price of diesel.

They said that the increase was caused by FOB because the price of diesel on the international market rose to $117 per barrel from $114 per barrel, indicating that the exchange rate would cause some increase but not a significant one.

The price might grow further and the general sales tax (GST) inclusion, even at 10%, would be driving the price considerably higher, they noted, if the government hiked the petroleum levy (PL) to Rs50 per litre on fuel, which appears likely to satisfy the IMF demand.

The increase in the price of gasoline on a FOB basis is anticipated to be between Rs20 and Rs21. In the upcoming fortnightly review of pricing, the government has been charging Rs50 per litre PL on gasoline, and adding even 10% GST will be extremely expensive for consumers.

In comparison to the time of the evaluation for the preceding two weeks, the price of gasoline on the global market increased to $97 per barrel from $93 per barrel.

Players in the oil industry believe that if the government had not increased the PL on diesel to comply with the IMF's requirements, it would not have allowed the currency rate to freely fluctuate.

The dollar had a significant increase against the local currency in two consecutive sessions on Thursday and Friday as a result of the government's decision to eliminate the ceiling on exchange rate parity.

On Friday, the rupee hit a new low against the US dollar and closed at Rs262.60, down 2.73% from the previous day. Concerns about a fresh round of inflation in the nation were also sparked by this.

However, insiders in the oil sector acknowledged that even while the government was reluctant to raise the GST on gasoline prices since doing so would cost it politically, petroleum prices were still expected to rise in the following fortnight review.

They stated that the price increases might get even worse in the upcoming biweekly review, which is due on February 15.