Daily fuel price adjustments to curb market abuse, ensure fair prices: petroleum minister – Pakistan

Petroleum Minister Ali Pervaiz Malik on Saturday said the introduction of daily fuel price adjustments would help curb market abuse, eliminate opportunities for windfall gains and ensure greater transparency and fair pricing for consumers.

The minister made the remarks during a meeting with key petroleum sector stakeholders. He added that the reform would promote transparency, strengthen competition and ensure fair, market-based prices for consumers.

A day earlier, the minister announced that fuel prices would now be fixed on a daily basis due to fluctuations in international market prices following renewed hostilities between Iran and the US.

Under the new mechanism, retail petroleum prices will be determined through a transparent, formula-based system driven by market fundamentals, reducing the scope for political intervention and shielding consumers from abrupt price distortions.

Among others, the meeting was attended by representatives of the Oil and Gas Regulatory Authority (Ogra), the Oil Companies Advisory Council (OCAC), the Oil Marketing Association of Pakistan (OMAP), refineries, oil marketing companies (OMCs) and senior officials of the Petroleum Division to discuss the implementation of the new pricing mechanism, a news release says.

The meeting was convened to brief industry stakeholders on the shift from weekly to daily petroleum price adjustments and obtain feedback on implementation challenges to ensure a smooth transition.

The move was widely welcomed by the petroleum industry, which described it as a positive step towards deregulating Pakistan’s petroleum sector.

Malik also informed the meeting that the reform had been introduced on the directive of Prime Minister Shehbaz Sharif and approved by the federal cabinet as part of the government’s commitment to establishing a rules-based petroleum pricing regime.

Addressing the participants, the petroleum minister said the daily pricing regime represented a fundamental shift towards a competitive, market-driven economy by ending dependence on the weekly price announcement cycle and mandatory government approval.

Officials told the meeting that the daily pricing mechanism formed a key component of the government’s phased deregulation strategy aimed at gradually reducing state intervention and allowing market forces to determine petroleum prices, similar to the daily movement of exchange rates.

The minister further said the Petroleum Division, in consultation with Ogra and industry stakeholders, was finalising comprehensive standard operating procedures to facilitate the transition.

He added that technical matters, including the Inland Freight Equalisation Margin (IFEM), refinery adjustments and true-up mechanisms, were being addressed through close coordination with stakeholders.

Ogra further informed the meeting that it had aligned its internal systems to implement the new regime and was upgrading its data dissemination mechanisms to publish daily petroleum price information for greater public transparency.

The meeting also reviewed operational issues relating to supply chain logistics, inventory management and the availability of real-time data.

The government assured stakeholders of its full support in addressing operational challenges and informed them that a dedicated committee had been constituted to oversee the transition and resolve implementation issues through consensus.

Malik stressed that Ogra, district administrations, OMCs, dealers, OCAC and OMAP all had important roles in ensuring that the reform is successful.

He also acknowledged that major reforms often present implementation challenges, but reiterated the government’s commitment to protecting consumers’ interests while ensuring the long-term sustainability of the petroleum sector.

Additionally, representatives from OCAC, OMAP, refineries and OMCs shared their views and highlighted operational concerns regarding the implementation of the daily pricing mechanism.

Malik assured them that all genuine issues would be addressed through continued consultation and collaborative engagement.

The minister ordered the Petroleum Division and Ogra to have follow-up meetings with industry representatives to further refine the pricing formula, resolve outstanding technical issues and ensure the successful rollout of the new system.

The government had been announcing weekly revisions to fuel prices since early March, alongside measures for the conservation of fuel amid possible oil supply disruptions due to the ongoing conflict in the Middle East. The federal government in April also announced targeted relief measures to provide subsidised fuel.

A day earlier, the government increased petrol and diesel prices by Rs5.44 and Rs31.05 per litre, respectively, with immediate effect for the next three days until July 20, to pass on the impact of higher import premiums and global prices following renewed regional tensions.

Following the increase, the price of petrol stands at Rs316.15 per litre and that of HSD at Rs354.35.