ISLAMABAD: The federal government has set June 2027 as the target for deregulating petrol prices as it moves to reform the country’s fuel pricing system and introduce greater competition in the petroleum market.
The decision was taken at a meeting of the Petroleum Pricing Committee chaired by Petroleum Minister Ali Pervaiz Malik, which reviewed proposed changes to the existing pricing framework.
The committee examined the petrol pricing formula and approved principles for government intervention in diesel prices during emergencies. The proposed mechanism includes defined triggers for significant price shocks and measures that could be taken in response.
The committee will submit its final recommendations to Prime Minister Shehbaz Sharif for approval.
IFEM Formula and Oil Marketing Sector Under Review
The committee also approved a revised methodology for calculating the Inland Freight Equalisation Margin (IFEM), a component of petroleum prices.
The Oil and Gas Regulatory Authority (OGRA) is expected to complete its audit of IFEM for fiscal year 2026 by the end of calendar year 2026.
OGRA was also directed to submit recommendations on the consolidation and performance of existing oil marketing companies, with the review focusing on international industry practices and the adoption of modern technologies.
Fuel Reserves Preferred Over Price Stabilisation Fund
The committee reviewed proposals for establishing a petroleum price stabilisation fund to cushion consumers from international price fluctuations.
However, officials concluded that maintaining adequate strategic fuel reserves would be more appropriate as the country moves towards a deregulated market, rather than establishing a separate stabilisation fund.
The proposed reforms are aimed at gradually shifting Pakistan from government-administered fuel prices towards a market-based pricing system while establishing mechanisms for intervention during exceptional price shocks.
A subcommittee headed by Mir Naeem Ghauri will meet Federal Board of Revenue officials to assess whether changes to petroleum-sector taxation are required in light of evolving market conditions.