Govt to decide on deregulation of petroleum products in crucial meeting today

Petroleum Ministry considers giving oil companies control over fuel pricing, with daily price changes expected

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A meeting is set to take place today regarding the potential delegation of fuel price-setting authority to oil marketing companies (OMCs), sources within the Petroleum Ministry confirmed.

Petroleum Minister Musadik Malik will preside over the meeting, which will examine the transfer of power to determine petroleum product prices to OMCs, following an office order issued yesterday by Prime Minister Shehbaz Sharif.

In the office order, the prime minister instructed the Petroleum Division to finalise and present the deregulation framework for the petroleum sector. Chairman of the Oil and Gas Regulatory Authority (OGRA), Masroor Khan, is expected to provide a briefing on the proposal to grant pricing authority to the oil marketing companies.

According to sources, if the OMCs receive the authority to set fuel prices, daily price changes could become the norm. The government aims to fix the petroleum levy at Rs80 while transferring the remaining responsibilities to the OMCs.

Insiders said that the government currently compensates OMCs for exchange rate differences in petroleum imports and issues refunds for provincial sales tax on services. In the last fiscal year, Rs65 billion was refunded to OMCs for sales tax on services, they added.

Read also: Oil marketers may set fuel prices

The Pakistan Petroleum Dealers Association (PPDA) has expressed support for the prime minister's decision to end the government's intervention in determining oil prices. However, the association believes that OGRA, not the OMCs, should set petroleum product prices.

"OGRA is well-suited to protect the interests of all stakeholders and consumers in a professional manner," said PPDA spokesperson Hassan Shah in a statement issued on Thursday. He argued that giving pricing authority to the OMCs would be akin to "throwing consumers to the wolves."

"Pakistan's OMCs are already profiteering and do not miss any opportunity to earn illicit profits. Giving them more power will have disastrous consequences for the country's economy," he added.

Shah stressed the need for a thorough study and evaluation of the benefits and implications before making a final decision.