Govt considers shifting to daily petroleum price adjustment mechanism

The government is considering introducing a daily petroleum price adjustment mechanism that would transfer responsibility for setting fuel prices to the Oil and Gas Regulatory Authority (Ogra), according to officials familiar with the proposal.

Under the proposed system, Ogra would determine the prices of motor spirit (petrol), high-speed diesel, light diesel oil and kerosene on a daily basis, with revised rates taking effect from midnight. The move would replace the current weekly pricing mechanism and remove the need for approvals from the Petroleum Division, Finance Division and the prime minister before new prices are announced.

The proposal is being reviewed by a committee formed by Prime Minister Shehbaz Sharif to examine changes to the country's petroleum pricing framework. The committee has held four meetings, most recently on July 13, chaired by Petroleum Minister Ali Pervaiz Malik.

Officials from the Finance Division, Petroleum Division, Pakistan State Oil, the Ministry of Law and Justice, Ogra and consultancy firm KPMG attended the meeting alongside committee members.

KPMG presented four pricing options — monthly, fortnightly, weekly and daily revisions — outlining the advantages and disadvantages of each. According to sources, committee members have so far shown a preference for the daily pricing mechanism.

The proposed model is expected to follow a hybrid approach rather than full deregulation. Under the framework, oil marketing companies would determine inland freight equalisation margins, company margins and dealers' commissions, similar to the existing pricing mechanism for high-octane fuel.