OCCI terms Rupee Depreciation ‘Harmful’

November 12, 2021

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The Overseas Investors’ Chamber of Commerce and Industry (OICCI) has raised its concerns over depreciating currency and termed it “very detrimental” to the economy.

The OICCI statement came at a time when Rupee lost its ground to USD to trade at PKR174/$.

On October 26, the rupee fell to a record low of $ 175.3 against a $ 4.2 billion aid package announced by Saudi Arabia.

Sharing the key recommendations of the OICCI, Giyas Khan, Engro CEO and representative of OCCI, said the Pakistan is an import-based economy and the devaluation of the rupee is very detrimental to it. This also leads to high electricity prices. Fuel based electricity accounts for about 11.5% of Pakistan’s import costs.

The OICCI has called on the government to review the Margins of oil marketing companies, increasing the impact of the rupee devaluation on fuel prices. He revealed the main features of the OICCI Energy Recommendations 2021 program.

Since September 2020, the government has moved the pricing mechanism from monthly to bi-weekly, and also changed the price comparison based on PSO oil imports to the Platt index, as well as the average PSO premium and extraordinary spending.

“The price structure for petroleum products should cover all incidental import costs and exchange rate fluctuations during this period and provide sustainable and reasonable profitability for the oil traders,” he added.

“Currency effects should be based on the average weekly exchange rate previously reported by the Strategic Defense Bank, rather than a theoretical rate based on peacekeeping supplies and actual imports.”

The OMC margin should cover all costs including downtime, operating costs and 20 days of inventory as recommended by OICCI.

OICCI has also sought to accelerate the construction of new LNG terminals in the country in anticipation of a significant shortage of locally produced gas.