Petroleum minister defends daily fuel pricing mechanism as lawmakers question consumer impact

Petroleum Minister Ali Pervaiz Malik defended the government’s new daily fuel pricing system on Thursday, telling lawmakers it has ended a practice under the previous mechanism in which oil companies restricted petrol supplies ahead of expected price revisions.

The federal government announced on July 17 that petroleum product prices would now be reviewed and notified daily rather than weekly, a shift introduced as renewed tensions between the United States and Iran continue to unsettle global oil markets and raise concerns about fuel supply security. The daily system followed an earlier move from fortnightly to weekly price revisions that had been introduced during the first phase of the US Iran conflict.

The change has faced pushback from transporters, businesses and opposition lawmakers, who argue that frequent price adjustments create uncertainty, push up transport and freight costs, and make it harder for businesses and households to plan their spending. Petrol pump owners had threatened a nationwide strike over the issue before suspending their protest after receiving government assurances that their concerns would be addressed.

Speaking at a meeting of the National Assembly Standing Committee on Petroleum, chaired by Umar Farooq, Malik said petrol and diesel prices still rely on a seven day rolling average of international market prices, even though the pricing is now updated daily instead of fortnightly. He said the government has delegated pricing authority to the Oil and Gas Regulatory Authority, which coordinates with stakeholders before finalizing prices, and noted that the pricing methodology and benchmark figures are published on the regulator’s website. He added that Prime Minister Shehbaz Sharif had instructed the regulator to also publish the formula in Urdu to improve transparency.

Malik explained that international benchmark prices are drawn from Platts, with government taxes and oil company margins added afterward to determine domestic retail prices. He said the switch to daily pricing corrected a flaw in the earlier weekly system, under which companies could anticipate price movements from an emerging three day average and adjust supply accordingly. Under the new approach, he said, prices are set daily based on the seven day average, removing that predictability.

Committee members pushed back sharply on the new mechanism. Senator Saifullah Abro described it as slow poison for consumers, saying the public has no way of knowing what today’s price is, let alone tomorrow’s. He questioned recent price increases, pointing out that international crude prices rose from 76 dollars a barrel on July 11 to 82 dollars on July 17, and asked how domestic fuel prices had climbed by 30 rupees over the same period. Malik responded that the comparison was misleading since domestic fuel prices track refined petroleum products rather than raw crude oil.

The minister also defended the existing tax structure, saying the petroleum levy remains lower than the rate imposed during the height of the conflict period. He said reducing the levy further would be difficult without agreement from the International Monetary Fund, though he suggested an alternative revenue source could eventually make a reduction feasible.

Ogra officials also addressed the committee in support of the new system. Acting Chairman Nabeel Ahmed Awan said daily prices remain based on the seven day average, meaning that both price declines and increases in the global market are passed on to consumers gradually over a week. He said the new mechanism removes opportunities for short term profiteering by preventing traders from creating false market impressions to turn a profit. Officials also told the committee that customs duty on petrol currently stands at 18.11 rupees per litre.

The session grew tense at points, with committee members criticizing Ogra for failing to circulate a working paper ahead of the meeting. When the acting chairman asked what a working paper was, Abro rebuked him sharply, questioning his familiarity with basic regulatory procedure.

Malik also told the committee that the process to appoint a permanent Ogra chairman had begun on schedule, but that interviews failed to produce a suitable candidate, prompting officials to restart the search. The government had reshuffled Ogra’s leadership in April, replacing then acting chairman Shahzad Iqbal with Nabeel Ahmed Awan, a senior Pakistan Administrative Service officer and secretary of the Establishment Division, who was appointed to a three month term as the search for a permanent chairman continues.