Significant hike in POL prices to heat up inflation – Alfalah Securities Limited

Karachi: The government has raised the prices of petroleum products in the range of PKR 2.78 to PKR 6.29 per litre on account of a rising trend observed in the international crude oil prices by USD 4 per barrel to USD 114 per barrel and PakRupee devaluation against the US Dollar by 1.2%MoM.

According to Alfalah Securities Limited, OGRA had recommended the government that they may maintain oil prices at the current level by absorbing the price hike impact in Petroleum Levy as the consumers are already overburdened due to high PL and sales tax charges on POL products, which has helped the government to collect PKR 9 billion during 1HFY12.

The price of HOBC has been raised by PKR 6.29 per litre, Petrol by PKR 5.37 per litre, Diesel by PKR 4.64 per litre, Light Speed Diesel by PKR 3.43 per litre and kerosene oil by PKR 2.78 per litre. After the current price hike, HOBC would be sold at PKR 118.2 per litre, petrol at PKR 94.91 per litre, Light Speed Diesel at PKR 90.21 per litre, Diesel Oil at PKR 103.46 per litre and kerosene at PKR 92.02 per litre. An increase in petroleum prices would heat up inflation in the economy as POL products are widely used in the production of electricity and consumed as a fuel. Moreover, an increase in POL prices would result in reducing the popularity of the present government and in order to avoid such un-populist measures the government may cut POL prices in the near term as the current year may turn out to be a year of elections.

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