ENSURING TRANSPARENCY: The committee agreed that the recently established petroleum price stabilisation fund should operate under a fully rule-based framework with clearly defined mechanisms for funding and disbursements. PHOTO:FILE
ISLAMABAD:
Following the fresh closure of the Strait of Hormuz, the government has mulled over a plan to revise oil prices on a weekly or even daily basis.
During previous oil price shocks following the Iran-US war, the government switched from fortnightly to weekly oil price reviews to avoid petrol and diesel shortages. India also revises its retail petrol and diesel prices daily.
The proposal was considered in the fourth meeting of the committee constituted by the prime minister to review the petroleum pricing mechanism, held on Monday. The committee also considered a proposal to finalise the formation of a fund aimed at stabilising oil prices.
During the meeting, Petroleum Minister Ali Pervaiz Malik said a proper mechanism for the fund should be finalised to avoid its use based on political considerations. He said relief should be provided to oil consumers.
Sources told The Express Tribune that proposals relating to oil price review and fund formation would be submitted in the next meeting of the oil pricing committee.They said the committee also needs to decide the sources of fund generation.
KPMG, a consultancy firm, presented its study during the meeting, proposing pros and cons of reviewing oil prices daily or twice a week. The firm also warned about future oil price shocks due to the closure of the Strait of Hormuz. The study also pointed out that petrol prices in Pakistan remain lower than in Bangladesh, Sri Lanka and Türkiye.
Recently, crude oil prices had gone below $80 per barrel after crossing $100 before the Iran-US peace deal mediated by Islamabad. Analysts had warned earlier that crude oil prices could go over $150 per barrel if the Strait of Hormuz closure continues.
The government has recently increased petrol and diesel prices by close to Rs14 per litre following the fresh closure after US strikes on Iran.
Meanwhile, according to a statement, the fourth meeting of the committee was held under the chairmanship of Malik. The committee reviewed international best practices and prevailing market conditions.
Malik said the committee’s work had assumed greater significance in view of the renewed closure and resulting uncertainty in global energy markets. He noted that petrol prices in Pakistan remain lower than in Bangladesh, Sri Lanka and Türkiye, while being broadly comparable to India.
He added that the government has proposed amendments to the Refinery Policy to increase domestic diesel production and reduce reliance on imported diesel.
The committee recommended that OGRA publish daily Platts pricing data on its website so the public has access to the benchmark used for petroleum pricing in Pakistan. The committee agreed that the recently established petroleum price stabilisation fund should operate under a fully rule-based framework with clearly defined mechanisms for funding and disbursements, ensuring that its operation remains transparent and free from whimsical decision-making.
Digitisation of the oil supply chain was stressed by all members. The minister directed that the next meeting would be the committee’s final meeting, after which recommendations would be submitted to the prime minister.
The meeting was attended by Federal Minister for Economic Affairs Ahad Khan Cheema, Minister of State for Finance Bilal Azhar Kayani, Chairman OGRA Nabeel Awan, the KPMG team, other committee members, and representatives from the Finance Division, and senior officials from Oil and Gas Regulatory Authority (OGRA), Pakistan State Oil (PSO), the Ministry of Law and Justice, and the Petroleum Division.