Pakistan could move towards a competitive and market-based system for determining petrol prices, with the Petroleum Pricing Committee recommending June 2027 as a possible target for deregulation.
The recommendation was made during a meeting chaired by Federal Minister for Petroleum Ali Pervaiz Malik, where officials discussed proposed reforms to Pakistan’s petroleum pricing framework.
Under the proposed changes, petrol prices would gradually move away from being determined primarily through government mechanisms and towards a more competitive market-based system.
The final decision, however, will rest with the government.
Petrol Deregulation Proposed for June 2027
The Petroleum Pricing Committee has recommended June 2027 as a possible target for petrol deregulation.
The proposed timeline is part of a gradual reform process rather than an immediate change in the pricing mechanism.
According to the committee, shifting petrol pricing towards a competitive market could make petroleum prices more transparent and predictable while improving overall market efficiency.
The reforms are also intended to provide consumers with greater clarity about how fuel prices are determined.
However, the June 2027 target remains a recommendation and will only move forward if approved by the government.
Focus on Transparent Fuel Pricing
The committee said the proposed market-oriented reforms could help improve transparency in the petroleum sector.
A competitive pricing mechanism would represent a significant change from the existing system in which the government plays a central role in determining petroleum prices.
The committee also emphasized the need to make prices more predictable and improve the efficiency of the petroleum market.
At the same time, officials are considering safeguards to protect consumers from extraordinary price movements and emergency situations.
Emergency Mechanism Proposed for Diesel
Alongside petrol deregulation, the committee discussed a mechanism for government intervention in the event of an extraordinary increase in diesel prices.
The proposed guidelines would provide a framework for government action during emergency situations involving unusually sharp increases in diesel prices.
The mechanism is intended to ensure that exceptional circumstances can still be addressed as the wider petroleum pricing system becomes more market-oriented.
This would allow the government to retain an intervention framework for extreme situations while gradually reducing its direct role in routine price determination.
Fuel Reserves to Become More Important
The committee also noted that maintaining adequate fuel reserves would become increasingly important as Pakistan moves towards eventual deregulation.
Sufficient reserves could provide an additional layer of protection during periods of supply disruptions or unusual market conditions.
The emphasis on fuel reserves forms part of the broader approach being considered for a future petroleum market with greater reliance on competitive pricing.
Revised IFEM Methodology Approved
The Petroleum Pricing Committee also approved a revised methodology for calculating the Inland Freight Equalization Margin (IFEM).
The IFEM mechanism is used within Pakistan’s petroleum pricing system to account for the cost of transporting fuel to different parts of the country.
A revised methodology is expected to provide a more structured approach to calculating transportation-related costs within the fuel pricing framework.
The Oil and Gas Regulatory Authority (OGRA) also assured the committee that the IFEM audit for fiscal year 2026 would be completed by the end of calendar year 2026.
OGRA Asked to Review Oil Marketing Companies
During the meeting, OGRA was directed to submit written recommendations regarding the performance of oil marketing companies.
The review is part of the committee’s broader efforts to improve transparency, market efficiency and predictability in Pakistan’s petroleum sector.
The assessment of oil marketing companies could provide the government with additional information as it considers changes to the country’s fuel pricing structure.
Final Report to Be Presented to PM Shehbaz
The Petroleum Pricing Committee’s final report is expected to be presented to Prime Minister Shehbaz Sharif soon.
The report will cover several areas of the proposed petroleum sector reforms, including petrol deregulation, emergency intervention mechanisms for diesel prices, the revised IFEM methodology, fuel reserves and the performance of oil marketing companies.
The recommendations could form the basis for future decisions regarding the structure of petroleum pricing in Pakistan.
Possible Major Shift in Petroleum Pricing
If the government approves the proposed June 2027 target, Pakistan could begin a major transition towards market-based petrol pricing.
Such a shift would change the way petrol prices are determined and could increase the role of market conditions in influencing prices.
At the same time, the proposed emergency mechanism for diesel and emphasis on adequate fuel reserves indicate that the government is considering safeguards alongside deregulation.
For consumers, the impact of the proposed system will depend on how the reforms are implemented and how effectively the market operates.
For now, June 2027 remains a proposed target rather than a confirmed date, with the final decision expected after the Petroleum Pricing Committee submits its report to Prime Minister Shehbaz Sharif.
Also read: Pakistan Petrol Prices Face Pressure Despite Cheaper Oil
