Today's puzzle: POL prices - Fill fuel tank now or wait till 12am?
Business
Petroleum Development Levy will be the determining factor, maybe political considerations too
LAHORE (Web Desk) – Just like the previous fortnight, it is the Petroleum Development Levy (PDL) that will determine whether the consumers in Pakistan will get cheaper POL products or not as the government is going to revise the rates today (July 15) – a practice repeated twice a month.
On June 30, the government had increase the PDL on petrol by Rs5 per unit from the previous level of Rs50. But according to the conditions accepted under the International Monetary Fund (IMF) deal, it must reach Rs60 level.
So the equation is simple for the government – at least as suggested by the IMF: increase the PDL to Rs60 per litre given the latest assurance given by Prime Minister Shehbaz Sharif to IMF Managing Director Kristalina Georgieva.
Read more: Shehbaz Sharif promises zero violation of IMF deal to Kristalina Georgieva
The prime minister, during a telephonic conversation with the IMF chief on Friday, had told her that he would not tolerate an iota of violation of the agreement reached with the world’s top financial institution.
Was it necessary? Yes, of course given Georgieva noted during the discussion that the prime minister had built a very convincing case, though the IMF Executive Board was sceptical about the country’s commitment to fulfilling the conditions of agreement due to the past trust deficit.
However, in the light of her continued engagement with him, she assured the board members that Pakistan would deliver on its commitments as she had personally met the prime minister and seen his seriousness, Georgieva added.
In a previous analysis on June 30, it was noted that the government had three choices: increase the PDL by Rs10 in one go, incremental surge, and delay the imposition.
Read more: Petroleum Development Levy: Will the govt further burden the people or absorb the increase?
But given that the country’s financial wizards opted for the second option, it seems even more likely that the PDL would be increased to the agreed level of Rs60 per litre on petrol. However, the government can still absorb the hike through subsidy – another point of contention that nearly resulted in complete derailment of the talks between the two sides.
And also add the dollar exchange rate, which has improved in favour of the rupee in recent days, to the puzzle, as the industry experts believe that the prices for different products should be reduced. But the pending PDL on high-speed diesel means it won’t be possible in this particular case.
However, given the latest proposal by the National Electric Power Regulatory Authority (Nepra), the people might get some relief due to the political considerations as no politician can afford such a bad publicity 24/7.
