ISLAMABAD: Pakistan will begin setting fuel prices on a daily basis as renewed hostilities between the United States and Iran in the Gulf region push up global oil prices, with the government handing responsibility for price-setting to the country’s oil regulator under a broader plan to increase transparency and deregulate the sector.
Pakistan has traditionally revised petroleum prices every fortnight but switched to weekly adjustments after fighting erupted between the US and Iran in late February, citing heightened volatility in international energy markets.
With renewed hostilities between the two countries amid fears of a widening regional war, global fuel prices have surged again, prompting the government to adopt the new system to respond more quickly to international market movements while reducing political involvement in pricing decisions.
“The Cabinet and the Prime Minister have decided that ... OGRA will be given the responsibility to decide the [fuel] prices on a daily basis according to the international market,” Petroleum Minister Ali Pervaiz Malik said at a televised news conference, referring to the Oil and Gas Regulatory Authority.
He said OGRA would also publish the international benchmark prices and the factors used to determine retail fuel prices to improve transparency.
“People should know why it is necessary to increase prices,” Malik continued, adding that publishing the pricing formula would allow consumers to better understand how domestic fuel prices are calculated.
Malik said the move formed part of a broader effort to deregulate Pakistan’s petroleum sector by reducing the government’s role in fuel pricing and transferring greater responsibility to the independent regulator.
He said Prime Minister Shehbaz Sharif had also constituted a high-level committee to prepare recommendations within the next two to three weeks on a wider energy pricing and energy security framework, including reforms aimed at reducing Pakistan’s dependence on imported fuel.
Among the measures under consideration are strategic petroleum reserves, commercial oil storage arrangements with international energy companies and policies to boost domestic oil and gas exploration, refinery upgrades and infrastructure development, he added.
Information Minister Attaullah Tarar, who was also present at the joint news conference, said daily pricing would address longstanding criticism that consumers did not immediately benefit when international oil prices fell because prices were revised using weekly averages.
He added Pakistan had maintained uninterrupted fuel supplies during recent regional tensions by securing additional cargoes in advance from Saudi Arabia and the United Arab Emirates, avoiding the shortages and rationing seen in some other countries.
“We have reserves for one, one-and-a-half to two months,” he continued while promising that the government would continue to act against hoarding and profiteering in the petroleum sector.
