Pakistan Considers Daily Fuel Price Revision System Under OGRA

ISLAMABAD: The federal government is considering a daily petroleum price revision mechanism that would give the Oil and Gas Regulatory Authority (OGRA) responsibility for setting fuel rates. Under the proposal, revised prices for petrol, high-speed diesel, light diesel oil and kerosene would be calculated every night and take effect from midnight, reducing the government’s direct role in the pricing process.

Pakistan currently revises petroleum prices on a weekly basis, after previously using fortnightly and monthly pricing systems.

The proposed mechanism would remove the existing approval process involving the Petroleum Division, Finance Division and prime minister. OGRA would instead be allowed to announce revised fuel prices independently.

A committee formed by Prime Minister Shehbaz Sharif to review petroleum pricing reforms has held four meetings. Its latest meeting was chaired by Petroleum Minister Ali Pervaiz Malik on July 13.

Senior government officials, OGRA representatives, Pakistan State Oil and consultancy firm KPMG attended the meeting. KPMG presented monthly, fortnightly, weekly and daily pricing options along with their possible benefits and drawbacks.

Officials said committee members had shown a preference for the daily pricing model. However, the proposed framework is expected to operate as a hybrid arrangement rather than a completely deregulated market.

The proposal would also allow oil marketing companies to determine the Inland Freight Equalisation Margin, dealer commissions and marketing margins, similar to the system used for High Octane Blending Component.

OGRA would continue regulating the petroleum sector by monitoring fuel stocks, checking storage requirements and taking measures to prevent hoarding.

The proposed reforms also include the creation of a price stabilisation fund. Savings generated during sharp declines in international oil prices could be placed in the fund and later used to protect consumers from sudden global price increases.

Officials are also considering maintaining domestic fuel prices within a range of Rs275 to Rs325 per litre. Any surplus below the lower limit could be transferred to the fund, while accumulated money could be used if prices rise above the upper limit.

Source: ARY News