Federal Petroleum Minister Ali Pervaiz Malik has announced that the government is moving to deregulate fuel prices in Pakistan, reducing its direct role in setting petroleum product rates and shifting toward a market-based pricing system.
Addressing a meeting of the National Assembly Standing Committee on Petroleum, the minister said Pakistan has maintained a transparent system of announcing petroleum prices for the past two decades. He added that authorities are now working to bring the phased pricing mechanism in line with free market principles.
A committee formed by Prime Minister Shehbaz Sharif to review reforms in the petroleum pricing system has held three meetings so far, according to the minister. The committee proposals under consideration include a shift to daily price disclosure instead of the current periodic notification system.
Deregulation of petroleum products means that prices of petrol, diesel and light diesel oil will be determined by the market rather than notified by the government. Under this system, the government or regulatory authority would give up direct control over pricing, allowing companies to set their own rates.
This would mean the government steps away from the monthly or fortnightly price-setting process it currently follows. Oil marketing companies would instead determine fuel prices based on market conditions, demand, supply and applicable taxes.
As a result of deregulation, petrol and diesel prices could vary between companies in the open market. A company with higher operating costs may set a higher price, while another may offer fuel at a lower rate based on its own cost structure.
