ISLAMABAD: The government is considering introducing a daily petroleum price adjustment mechanism that would shift the responsibility for setting fuel prices to the Oil and Gas Regulatory Authority (Ogra), reducing the government’s direct involvement in the process.
Under the proposed system, Ogra would determine the prices of petrol, high-speed diesel, light diesel oil, and kerosene oil every night, with revised rates taking effect from midnight. At present, petroleum prices are revised on a weekly basis, following earlier systems of fortnightly and monthly adjustments.
The proposal would also eliminate the current approval process involving the Petroleum Division, Finance Division, and the Prime Minister, allowing Ogra to announce fuel prices independently.
A committee constituted by Prime Minister Shehbaz Sharif to review petroleum pricing reforms has held four meetings so far, the latest chaired by Petroleum Minister Ali Pervaiz Malik on July 13. The meeting was attended by senior government officials, Ogra representatives, Pakistan State Oil (PSO), and consultancy firm KPMG, which presented four pricing options—monthly, fortnightly, weekly, and daily—along with their potential benefits and drawbacks.
According to officials, committee members have shown a preference for the daily pricing model, although the proposed framework is expected to operate as a hybrid system rather than a fully deregulated market.
The proposal also envisages allowing oil marketing companies (OMCs) to determine the Inland Freight Equalisation Margin (IFEM), dealer commissions, and marketing margins, similar to the current pricing mechanism for High Octane Blending Component (HOBC).
Despite the changes, Ogra would continue to regulate the sector by monitoring fuel stocks, ensuring compliance with storage requirements, and preventing hoarding.
The proposed mechanism also includes the creation of a price stabilisation fund. Under the plan, savings generated when international oil prices fall sharply could be deposited into the fund and later used to shield consumers from sudden increases in global fuel prices.
Officials are considering maintaining a domestic fuel price band of Rs275 to Rs325 per litre.
If prices fall below the lower limit, the surplus would be transferred to the stabilisation fund, while accumulated funds could be used to cushion consumers if prices rise above the upper threshold due to international market fluctuations
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