Govt eyes petrol deregulation by June next year

The Pakistani government is set to deregulate petrol pricing by June 2027, with high-speed diesel to follow at a later stage, according to a recent meeting led by Petroleum Minister Ali Pervaiz Malik. Currently, the Petroleum Prices Stabilisation Fund (PPSF) has not been operationalised, and the government plans to modify the pricing mechanism instead.

Ogra, the Oil and Gas Regulatory Authority, may adjust diesel pricing without repeated cabinet approvals if unusual spikes in the diesel crack spread occur. The committee approved guiding principles for possible rules-based intervention in case of emergencies, aiming to avoid larger shocks from longer pricing intervals. The government believes maintaining adequate fuel stocks is more effective for price stability than relying on a price stabilisation fund, which would require additional taxation.

Deregulation could lead to more frequent price changes and potentially different prices across oil marketing companies, offering cheaper options in some cases but also exposing consumers to movements in international oil prices and the exchange rate. The committee also reviewed diesel pricing and agreed on a revised methodology for calculating the Inland Freight Equalisation Margin (IFEM).

Additionally, the committee directed the Oil and Gas Regulatory Authority to submit written recommendations on consolidating and improving the performance of existing oil marketing companies.