ISLAMABAD: The government is considering a new system that would allow petroleum prices to be adjusted every day, reducing direct government involvement in fuel price decisions, according to a senior Petroleum Division official.
Under the proposed mechanism, the Oil and Gas Regulatory Authority (Ogra) would set prices of petrol, high-speed diesel, light diesel oil, and kerosene oil every night, with new rates coming into effect from midnight.
Currently, fuel prices are revised weekly. Earlier, the system involved fortnightly and monthly adjustments. The new proposal would remove the current approval process involving the Petroleum Division, Finance Division, and the prime minister before finalising fuel prices.
Prime Minister Shehbaz Sharif had formed a committee to review possible changes to the petroleum pricing system. The committee, headed by Petroleum Minister Ali Pervaiz Malik, has held four meetings, with the latest session taking place on July 13.
The meeting was attended by government officials, Ogra representatives, Pakistan State Oil (PSO), the Ministry of Law and Justice, Finance Division officials, and experts from KPMG.
KPMG presented four possible pricing models monthly, fortnightly, weekly, and daily adjustments highlighting the benefits and challenges of each option. Sources said committee members are currently favouring the daily pricing model.
The proposed system would not be a complete deregulation. Instead, it would work as a hybrid model where oil marketing companies (OMCs) would decide their own margins, freight charges, and dealers’ commissions, while Ogra would continue to monitor the market.
Ogra would also ensure that oil companies maintain required fuel stocks and prevent hoarding or supply disruptions.
Under the plan, any savings from lower international oil prices could be placed into a stabilisation fund. The fund could later be used to protect consumers when global oil prices rise.
For example, the government could set a fuel price range of Rs275 to Rs325 per litre. If prices fall below Rs275, extra savings would go into the fund, while the collected funds could be used to control prices if they rise above Rs325 due to international market changes.
