ISLAMABAD (Dunya News) – The government has decided to gradually deregulate Pakistan’s petroleum sector after adopting a weekly review mechanism for oil prices during the Iran-US conflict, with the aim of promoting competition, improving transparency and enhancing consumer benefits.
According to sources, a proposal has been made to reduce the crack spread for high-speed diesel from 70 dollars per barrel to between 35 and 40 dollars per barrel. Under IFEM reforms, it has also been recommended that the number of petroleum depot points be reduced from 22 to 11.
Government officials said Pakistan’s experience indicates that effective competition through deregulation can deliver significant benefits to consumers. They noted that prices of High Octane Blended Component (HOBC) fuel are already deregulated, allowing oil marketing companies to compete on pricing and offer improved services.
Officials also cited the telecommunications sector as an example, where liberalisation replaced strict government price controls with competition, resulting in lower prices, better services and increased innovation.
They maintained that if the government limits its role to collecting taxes and customs duties while allowing competitive market forces to determine fuel prices, consumers would benefit from lower prices, improved services and greater choice.
The fifth meeting of the committee established by Prime Minister Shehbaz Sharif to review the petroleum pricing mechanism was held under the chairmanship of Federal Minister for Petroleum Ali Pervaiz Malik. Participants agreed on a phased transition from the existing controlled pricing system to a deregulated market-based model.
During the meeting, sub-committees presented recommendations on the petroleum pricing framework, while KPMG shared a comparative review of fuel prices and tax structures across regional countries. Participants appreciated the proposed daily pricing formula and measures aimed at improving transparency and reducing unnecessary price fluctuations.
The meeting was informed that OGRA has activated a dashboard on its website where daily petroleum prices, the pricing formula and relevant Platts data are available to the public, a move expected to further strengthen transparency.
Ali Pervaiz Malik said oil marketing companies should be required to fully digitalise the petroleum supply chain to improve transparency, traceability, operational efficiency and accountability.
The committee also reviewed the moratorium on establishing new oil marketing companies and its impact on competition, investment and market structure. Participants agreed that the IFEM Pool mechanism also requires a comprehensive review.
The issue of a windfall tax was also discussed, with a decision that the Ministry of Finance, the Federal Board of Revenue (FBR) and the Petroleum Division would hold consultations and present a report at the committee’s next meeting.
The meeting was attended by National Coordinator NCMC Lieutenant General Zafar Iqbal, Minister of State for Finance Bilal Azhar Kayani and other members of the committee.