The government is considering a major change to Pakistan’s petroleum pricing system that could see fuel prices revised every day instead of the current weekly schedule.
If approved, the proposed mechanism would make the Oil and Gas Regulatory Authority (OGRA) responsible for determining the prices of petrol and other petroleum products daily. As a result, the government’s direct role in fuel price decisions would be significantly reduced.
The proposal is currently under review by a committee formed by the prime minister. The committee has already held several meetings to evaluate different pricing options.
Daily Fuel Price Mechanism Under Review
At present, petroleum prices in Pakistan are revised every week. Previously, prices were adjusted every fortnight and, before that, on a monthly basis.
However, the government is now considering a system where prices would be reviewed every night. The revised rates would then become effective at 12:00 am.
Under the proposed mechanism, OGRA would determine the prices of:
- Motor Spirit (Petrol)
- High-Speed Diesel (HSD)
- Light Diesel Oil (LDO)
- Kerosene Oil (KO)
Consequently, the existing process of circulating pricing summaries for approval could come to an end.
Government Committee Evaluates Pricing Options
The prime minister constituted a committee to examine possible changes to the petroleum pricing system.
The committee has so far held four meetings, including its latest session on July 13, chaired by Petroleum Minister Ali Pervaiz Malik.
Participants included senior government officials, representatives from OGRA, Pakistan State Oil (PSO), the Finance Division, the Petroleum Division, the Ministry of Law and Justice, and other relevant stakeholders.
During the meeting, consultants presented four possible pricing mechanisms:
- Monthly pricing
- Fortnightly pricing
- Weekly pricing
- Daily pricing
Each option was reviewed along with its potential advantages and challenges.
Committee Shows Preference for Daily Pricing
According to sources familiar with the discussions, committee members have shown greater interest in adopting the daily fuel price adjustment mechanism.
However, the proposed model is expected to follow a hybrid system instead of complete deregulation.
This means the government would still maintain regulatory oversight while allowing greater operational flexibility within the petroleum market.
OGRA Could Take a Larger Role
Under the proposed framework, OGRA would become the primary authority responsible for determining petroleum prices.
Meanwhile, the Petroleum Division, Finance Division, and the prime minister would no longer participate in the final fuel price approval process.
In addition, oil marketing companies (OMCs) would determine:
- Inland Freight Equalisation Margin (IFEM)
- OMC margins
- Dealers’ commissions
This arrangement would follow a model similar to the existing pricing system for High Octane Blending Component (HOBC).
Market Oversight Would Continue
Although pricing responsibilities could shift, OGRA would continue monitoring the petroleum sector.
The regulator would oversee petroleum stocks maintained by oil marketing companies and ensure compliance with storage requirements.
Moreover, OGRA would continue monitoring the market to discourage hoarding and maintain adequate fuel supplies across the country.
Proposed Stabilisation Fund Explained
The proposal also includes a mechanism aimed at reducing the impact of international oil price fluctuations.
Under the suggested framework, savings generated during periods of lower global oil prices could be transferred to a stabilisation fund.
Those funds could later help protect consumers if international oil prices rise sharply.
For example, officials have discussed maintaining a domestic price band between Rs275 and Rs325 per litre.
If fuel prices fall below Rs275 per litre, the savings could be deposited into the stabilisation fund.
On the other hand, if prices rise above Rs325 per litre because of international market conditions, the accumulated funds could be used to help stabilise retail prices.
Proposal Still Under Consideration
The proposed daily fuel price adjustment in Pakistan remains under review and has not yet been implemented.
The committee continues evaluating the available options before making its final recommendations.
If approved, the new mechanism would represent one of the most significant changes to Pakistan’s petroleum pricing system in recent years, with OGRA expected to play the central role in determining daily fuel prices.
