March 26, 2024 (MLN): The Oil Companies Advisory Council (OCAC) has requested the government to revert to the previous methodology for calculating petrol prices, which involves using the latest available exchange rate rather than a 15-day average exchange rate as the Pakistani Rupee (PKR) has currently stabilized.
The council has issued a letter to the Oil & Gas Regulatory Authority (OGRA) in order to request this change.
“As you are aware, the exchange rate applicable at the time of pricing was used for price computation in the past,” it reads.
However, effective August 01, 2022, OGRA changed its methodology and shifted to a 15-day average exchange rate, despite reservations from the Oil Industry.
As per the council, this change created exchange rate exposure for the Oil Industry.
It further highlighted that using the latest available exchange rate at the date of price change reflects the exchange rate for the upcoming fortnight and would be a better option compared to the current practice of using a 15-day average exchange rate.
Since the Pakistani Rupee has currently stabilized, the impact of correcting the pricing mechanism will be negligible.
Therefore, the OCAC has proposed reverting to the system of using the exchange rate applicable at the time/date of pricing change.
“We look forward to your usual support for the implementation of the above recommendation. We are also available for an opportunity to present the proposal in person,” the letter concludes.
