By Urdu Report Editorial Team
The federal government has decided to complete the deregulation of petrol prices by June 2027, with the aim of protecting consumers from sudden fluctuations while gradually moving towards a market-based pricing system.
A meeting of the Petroleum Pricing Committee was held under Federal Minister for Petroleum Ali Pervaiz Malik. The meeting reviewed the existing mechanism for setting petroleum product prices and agreed on several recommendations aimed at improving transparency, predictability and consumer protection.
Final Recommendations to Be Sent to Prime Minister
The committee decided that a final report containing its recommendations would soon be presented to the prime minister for consideration and approval.
The meeting also approved guidelines for rules-based intervention in diesel prices during emergency situations. The guidelines will include clear triggers for unusually sharp price increases and identify possible corrective measures.
Petrol Pricing to Gradually Become Market-Based
The committee also reviewed the existing petrol pricing formula and identified June 2027 as a possible target for gradually shifting petrol prices towards market-based pricing.
According to the committee, the deregulation process will be implemented gradually. The objective is to establish a competitive market while protecting consumers from sudden price fluctuations.
Review of IFEM System and OMCs
The committee reviewed the existing Inland Freight Equalization Margin (IFEM) system and agreed on a revised methodology for its calculation.
The Oil and Gas Regulatory Authority (OGRA) assured the meeting that the IFEM audit for fiscal year 2026 would be completed by the end of the current calendar year.
OGRA was also directed to submit written recommendations concerning the stability and performance of existing oil marketing companies (OMCs), adoption of international best practices and the use of modern technology.
Petroleum Price Stabilization Options Examined
The report of a subcommittee established to examine petroleum price stabilization was also presented.
The report included a comparative review of successful and unsuccessful price stabilization fund models in different countries. The committee directed the sub-group to further improve its recommendations.
However, the meeting noted that in view of future full deregulation of the market, maintaining adequate petroleum reserves in the country could be a more effective strategy than establishing a fund to artificially stabilize prices.
Possible Review of Petroleum Tax System
The committee also decided that a subcommittee headed by Mir Naeem Ghauri would meet the chairman of the Federal Board of Revenue (FBR).
The meeting will examine possible changes to the tax system for petroleum products in light of changing market conditions.
The committee said the recommendations aim to improve transparency and predictability in petroleum pricing, enhance market efficiency and protect consumers from sudden price increases.
The government also intends to gradually move Pakistan towards a deregulated petroleum market.
The meeting was attended by NCMC National Coordinator Zahid Mir, Mir Naeem Ghauri and officials from OGRA, FBR, the Finance Division, KPMG and the Petroleum Division.
