Pakistan weighs daily fuel price mechanism

Pakistan weighs daily fuel price mechanism

ISLAMABAD: The federal government is considering a major change to Pakistan’s fuel pricing system by introducing daily revisions to petroleum product prices instead of the current fortnightly adjustments.

Under the proposed mechanism, the Oil and Gas Regulatory Authority (OGRA) would take the lead in determining the prices of key petroleum products every night. These include petrol (motor spirit), high-speed diesel (HSD), light diesel oil (LDO), and kerosene oil. The revised rates would come into effect at 12:00 a.m. each day.

The proposal aims to make fuel prices more responsive to changes in international oil markets and exchange rate fluctuations. Officials believe that updating prices on a daily basis could reduce sudden price shocks for consumers and ensure that domestic fuel rates more closely reflect global market trends.

A senior official in the Petroleum Division said the new framework would significantly reduce the government’s direct role in setting petroleum prices. Instead, OGRA would independently calculate and announce daily rates under a transparent pricing formula.

Pakistan currently revises petroleum prices every 15 days after reviewing international crude oil prices, import costs, taxes, and exchange rate movements. The proposed daily pricing model represents a significant shift in the country’s fuel pricing policy and aligns with practices adopted in several other markets.

The government has not yet announced a timeline for implementing the new mechanism, and discussions on the proposal are still underway. If approved, the move could introduce more frequent but smaller price adjustments, allowing fuel prices to better reflect changing market conditions.