ISLAMABAD (Dunya News) - The federal government has set June 2027 as the target for deregulating petrol prices as part of a broader plan to reform the country’s fuel pricing system and encourage greater competition in the petroleum sector.
The decision was taken at a meeting of the Petroleum Pricing Committee chaired by Petroleum Minister Ali Pervaiz Malik, where officials reviewed proposed changes to the existing pricing mechanism, according to a report.
The reforms are aimed at making fuel pricing more transparent and predictable while reducing the impact of sudden fluctuations in international oil prices on consumers.
The committee approved guidelines for government intervention in diesel prices in emergency situations. The framework includes specific triggers for exceptional price shocks and possible measures to address their impact.
Officials also examined the existing petrol pricing formula as part of preparations for the shift towards a deregulated market.
The committee agreed to forward its final proposals to Prime Minister Shehbaz Sharif for approval.
It also endorsed a revised method for calculating the Inland Freight Equalisation Margin (IFEM), which forms an important part of petroleum pricing. The Oil and Gas Regulatory Authority (Ogra) informed the meeting that its audit of IFEM for the financial year 2025-26 would be completed by the end of calendar year 2026.
Ogra was further directed to prepare recommendations regarding the consolidation and performance of existing oil marketing companies. The review will focus on improving efficiency through international best practices and modern technology.
The committee also considered proposals for creating a petroleum price stabilisation fund based on international models. However, it concluded that maintaining sufficient strategic fuel reserves would be more suitable as the country moves towards eventual deregulation.
The proposed changes are intended to gradually replace government-administered fuel prices with a competitive market-based system while limiting the effect of sharp international oil price movements on consumers.
Meanwhile, a subcommittee headed by Mir Naeem Ghauri will meet the Federal Board of Revenue (FBR) chairperson to review whether changes to the petroleum sector’s taxation framework are required in light of evolving market conditions.