- The Petroleum Division was ordered to abolish the government's powers to fix fuel rates.
- Sources say this step is part of a phased plan to allow for market-determined pricing.
- Ogra was responsible for preparing the analysis and implications of price deregulation.
ISLAMABAD: The government has decided to relinquish its authority to fix fuel prices, transferring this critical responsibility to oil marketing companies (OMCs), sources said on Wednesday, as part of a gradual plan to deregulate the oil sector and allow market-driven product tariffs.
Oil industry analysts say the proposed deregulation seeks to empower MTOs to determine fuel prices based on various market forces.
However, local consumers who purchase gasoline and diesel from locations closer to ports and refineries would get relatively cheaper products due to the cost of transportation.
Prime Minister Shehbaz Sharif has ordered that the government's powers to fix prices of petroleum products be removed.
In response to this directive, Oil Minister Musadik Malik has called for an important meeting scheduled for tomorrow.
“The Petroleum Division has been directed to finalise and submit the deregulation framework for the petroleum sector. The Minister of Energy (Petroleum Division) has been pleased to convene a meeting on Thursday,” a notification issued by the Ministry of Energy (Petroleum Division) said.
According to the notification, the Oil and Gas Regulatory Authority (Ogra) has been tasked with presenting the issue along with analysis, implications and way forward for deregulation of petroleum products.
“Accordingly, Ogra is also requested to provide the required submission at the earliest as the same will be discussed at the said meeting,” the notice said.
When ready, the final framework for oil price deregulation will be presented to the Prime Minister.
However, this decision has met with stiff opposition from oil traders, who have expressed concern that giving oil marketing companies the authority to set prices could lead to unfair speculation, which would negatively affect their businesses.
On the other hand, refiners said deregulation could jeopardize nearly $6 billion of investment, as money is better spent on modernizing refineries, according to a News report.
Despite these objections, the government appears determined to press ahead with its plan, which aims to create a more competitive and responsive oil sector.
Last week, the Oil Marketing Association of Pakistan (OMAP) called on Prime Minister Shehbaz Sharif to intervene and finalise a mechanism to recover foreign exchange losses suffered by the industry.
In a letter to the prime minister, OMAP Chairman Tariq Wazir Ali highlighted the issue of unrecovered foreign exchange losses due to flaws in the current system. These losses, he claimed, have accumulated to a staggering Rs 26 billion.
