ISLAMABAD – The federal government has indicated that it has planned to allow the market forces to set the new prices of petrol, diesel and other products, reducing state’s direct role in setting fuel prices.
Speaking at a meeting of the National Assembly Standing Committee on Petroleum, Federal Minister for Petroleum Ali Pervaiz Malik said Pakistan has been announcing petroleum product prices through a transparent mechanism for the past two decades. He added that the government is now considering reforms aimed at aligning fuel pricing with market principles in phases.
The minister said a committee formed by Prime Minister Shehbaz Sharif has so far held three meetings to review possible changes to the petroleum pricing mechanism. Among the proposals under discussion is the introduction of daily fuel price updates.
Under the proposed deregulation framework, the government would no longer directly notify the prices of petroleum products such as petrol, diesel and light diesel. Instead, fuel prices would be determined by market conditions.
In practical terms, deregulation means the government or regulator would step back from directly controlling prices, allowing oil marketing companies to set prices based on factors such as market conditions, supply, demand, taxes and operating costs.
If implemented, deregulation could result in different fuel prices across companies, with each setting prices according to its own cost structure rather than following a single government-notified rate.
What is Deregulation?
Deregulation refers to reducing or removing the government’s direct control over pricing. In the case of petroleum products, it means fuel prices would no longer be fixed by the government. Instead, companies would determine prices based on market dynamics, including supply, demand, taxes and their individual operating costs, potentially leading to price differences between fuel retailers.
