ISLAMABAD – A major change could be coming to Pakistan’s petrol pumps, with the government preparing to loosen its grip on fuel pricing.
By June 2027, petrol prices could increasingly be driven by the market, potentially changing how pump owners operate and how much motorists pay at the station.
The move is aimed at making fuel prices more transparent and predictable, but the government says it does not want motorists to suddenly find themselves facing sharp price jumps. Instead, the deregulation process will be introduced in phases, with safeguards planned to cushion consumers from extreme fluctuations.
The plan came under discussion during a meeting of the Petroleum Pricing Committee, chaired by Federal Petroleum Minister Ali Pervaiz Malik. The committee reviewed how petrol and other petroleum products are currently priced and discussed a roadmap for changing the system.
Under proposed plan, petrol prices would move toward market-based system, with June 2027 identified as a possible target for the transition. Rather than making the change overnight, the government intends to allow competition to develop in the market while putting mechanisms in place to deal with unusually large price movements.
A final report containing the committee’s recommendations will be sent to the prime minister for consideration and approval.
Diesel prices are also part of the government’s plan. The committee approved guidelines for rules-based intervention during emergencies. Under the proposed system, specific triggers would be established to determine when a price increase becomes unusually high and requires government action.
The authorities would then have a set of corrective measures available instead of relying on ad-hoc decisions.
Officials also reviewed the Inland Freight Equalisation Margin (IFEM), which forms part of the current petroleum pricing structure.
A revised method for calculating IFEM was agreed upon, while OGRA told the committee that the audit of the FY2026 IFEM would be completed by the end of this calendar year.
The government is also looking at how efficiently Pakistan’s Oil Marketing Companies (OMCs) are operating.
OGRA has been asked to submit written recommendations on improving the stability and performance of OMCs, including the adoption of international best practices and modern technology.
The idea is to ensure that companies are ready for a more competitive market once deregulation moves forward.
Another proposal under review is whether Pakistan should establish a fund to soften sudden fuel price increases. A subcommittee presented a comparative study of successful and unsuccessful price stabilisation funds used around the world.
But officials appear to be leaning toward a different solution. With the government already planning eventual full deregulation, the committee noted that maintaining adequate petroleum reserves in the country could be more effective than using a fund to artificially keep prices stable.
The government is also considering changes to the taxation side of the petroleum pricing system. A subcommittee headed by Mir Naeem Ghauri will meet the FBR chairman to examine whether petroleum taxes need to be revised in response to changing market conditions.
Any adjustment in petroleum taxation could ultimately have a direct impact on the price consumers pay at petrol stations.
New Petrol Price in Pakistan set at Rs346.16 amid crude uptick
