A petroleum pricing committee has proposed June 2027 as the likely target for deregulating petrol prices and moving towards a more market-driven system.
ISLAMABAD: Pakistan’s Committee on Petroleum Pricing has set June 2027 as the likely target for petrol deregulation, as part of recommendations aimed at making fuel prices more transparent, predictable and market-driven.
The committee, chaired by Federal Minister for Petroleum Ali Pervaiz Malik, met on Thursday to review the country’s petroleum pricing framework and discuss measures to protect consumers from excessive price volatility.
The committee agreed on a set of recommendations to strengthen the existing pricing mechanism and decided to submit its final report to the prime minister for consideration and approval soon, according to an official news release.
New approach to diesel pricing
For diesel, the committee approved guiding principles for possible rules-based government intervention during emergencies.
The proposed framework would include clearly defined price-shock triggers and potential corrective measures to address significant disruptions in fuel prices.
The committee also reviewed recommendations concerning the petrol pricing formula and set June 2027 as the likely target for petrol deregulation.
According to the committee, deregulation would facilitate a gradual transition towards competitive, market-based fuel pricing while helping to shield consumers from excessive price fluctuations.
IFEM mechanism under review
The committee also examined the existing Inland Freight Equalisation Margin (IFEM) mechanism and agreed on a revised methodology for its calculation.
The Oil and Gas Regulatory Authority (OGRA) assured the committee that the audit of IFEM for financial year 2026 would be completed by the end of calendar year 2026.
The committee further directed OGRA to submit written recommendations on the consolidation and performance of existing oil marketing companies (OMCs).
The review will focus particularly on adopting best practices and using the latest technologies in the sector.
Fuel reserves preferred over stabilisation fund
The committee also considered a report prepared by subcommittees on a proposed price stabilisation fund. The proposals were benchmarked against various successful and unsuccessful international models.
The relevant subgroup was directed to further refine its recommendations.
However, the committee observed that, given the eventual deregulation of the petroleum market, maintaining adequate fuel reserves could be more appropriate than establishing a price stabilisation fund.
The committee said the agreed recommendations were intended to improve transparency and predictability in petroleum pricing, enhance market efficiency and protect consumers from abrupt price movements while supporting Pakistan’s gradual transition towards deregulation.
Tax regime also under review
A subcommittee headed by Mir Naeem Ghauri will meet with the Chairman of the Federal Board of Revenue (FBR) to assess whether the existing taxation regime needs to be reviewed in light of changing market conditions.
The meeting was attended by National Coordinator NCMC Zahid Mir, Mir Naeem Ghauri and representatives of OGRA, FBR, the Finance Division, KPMG and officials of the Petroleum Division.