Industry supports daily oil pricing regime

Terms it major step towards long-awaited deregulation of petroleum sector

ISLAMABAD:

The Oil Companies Advisory Council (OCAC) has backed the government's decision to review oil prices every day, paving the way for market deregulation, which has been discussed for two decades.

Federal Minister for Petroleum Ali Pervaiz Malik on Saturday chaired a meeting with key stakeholders, including the Oil and Gas Regulatory Authority (Ogra), OCAC, the Oil Marketing Association of Pakistan (OMAP), refineries and oil marketing companies (OMCs). Senior officials of the Petroleum Division were also present.

OCAC said that deregulation was expected to foster a more competitive, transparent and efficient fuel market by encouraging fair competition and improving operational efficiency across the industry.

The meeting was convened to brief industry stakeholders on the new pricing mechanism by transitioning from a weekly to a daily basis, and get first-hand feedback on implementation challenges. The reform marks a significant step towards deregulation of Pakistan's petroleum sector, aimed at enhancing transparency, ensuring consumer protection and fostering a more competitive market environment.

OCAC and its members appreciated the decision of daily pricing to pave the way for deregulation, an initiative that had been under discussion for the past two decades. They assured the Ministry of Petroleum and Ogra of their full support in achieving the goal.

Meeting participants noted that, in the long run, consumers would benefit from greater choice, improved service standards and market-driven pricing in a competitive environment. They expressed confidence that a well-planned and effectively implemented deregulation framework would contribute to the sustainable growth and modernisation of Pakistan's downstream petroleum sector while safeguarding consumer interests.

The energy minister said that the reform had been undertaken on the directive of the prime minister and approved by the federal cabinet as part of the commitment to move towards a rules-based petroleum regime. Under the new mechanism, retail prices will be determined through a transparent, formula-based process anchored in market fundamentals, insulating consumers from price shocks influenced by political expediency.

Ali Pervaiz Malik said that the implementation of the daily petroleum pricing regime represented a fundamental shift towards a market-driven competitive economy. By decoupling petroleum prices from the weekly announcement cycle and mandatory government approval, "we are reducing the potential for market abuse and windfall gains", he said.

The meeting was informed that the daily pricing mechanism would ensure greater transparency and fair pricing for consumers while shifting the focus from political intervention to market realities.

Participants were also briefed that the reform was a key component of the government's phased deregulation strategy to gradually reduce government intervention and allow market forces to determine petroleum prices, similar to the daily movement of exchange rates.

The minister emphasised that the Petroleum Division, in close consultation with Ogra and industry stakeholders, was developing comprehensive Standard Operating Procedures (SOPs) to facilitate the transition. Technical matters, including the Inland Freight Equalisation Margin (IFEM), refinery adjustments and true-up mechanisms, were being addressed collaboratively to ensure seamless implementation.

Ogra told the meeting that it was fully aligned to implement the new pricing regime and was upgrading its internal processes and data dissemination systems. It also committed to publishing the daily petroleum price data to maximise transparency and public access.

The meeting also reviewed operational aspects of the transition, including supply chain logistics, inventory management and the availability of real-time data. The government assured industry stakeholders of its full support for addressing the operational challenges. A dedicated committee was constituted to oversee the transition process and resolve implementation issues.