Petroleum minister defends daily fuel pricing as lawmakers question mechanism

Petroleum Minister Ali Pervaiz Malik on Thursday defended the government's daily fuel pricing mechanism, saying it had ended the practice of oil companies restricting petrol supplies in anticipation of price revisions under the previous system. The federal government on July 17 announced that petroleum product prices would now be reviewed and notified on a daily basis, replacing the weekly pricing mechanism, as renewed tensions between the United States and Iran continue to drive volatility in global oil markets and raise concerns over fuel supplies. The decision had come after the government had already shifted from fortnightly to weekly fuel price revisions following the first phase of the US-Iran conflict. The move, however, drew criticism from transporters, businesses and opposition lawmakers, who argued that frequent price revisions would create uncertainty, drive up transport and freight costs, and make it difficult for businesses and consumers to plan expenses. Petrol pump owners also threatened a nationwide strike before suspending the protest after the government assured them their concerns would be addressed. Speaking during a meeting of the National Assembly Standing Committee on Petroleum, chaired by Umar Farooq, Malik said petrol and diesel prices continue to be calculated using a seven-day rolling average of international market prices, despite now being revised daily instead of fortnightly. He said the government had delegated the authority to determine petroleum product prices to the Oil and Gas Regulatory Authority (Ogra), which is responsible for bringing all stakeholders together before finalising prices. Malik said the pricing methodology and the benchmark used for calculations are already available on Ogra's website, adding that Prime Minister Shehbaz Sharif had directed the regulator to publish the formula in Urdu to improve transparency. Read More: Daily fuel pricing drives freight surge Explaining the new system, the minister said international benchmark prices are sourced from Platts before government taxes and oil companies' margins are added to determine domestic retail prices. He argued that the shift to daily pricing had addressed a major flaw in the previous mechanism. "When prices were revised weekly, companies would see the three-day average emerging and reduce petrol supplies accordingly," Malik said. "Now prices are determined daily using the seven-day average." The new mechanism, however, came under sharp criticism from committee members, particularly Senator Saifullah Abro, who described it as "slow poison" for consumers. "The public does not know what today's price is or what tomorrow's will be," he said. "People are being given slow poison every day—they can neither live nor die." Questioning recent price increases, Abro noted that international crude oil prices had risen from $76 per barrel on July 11 to $82 on July 17, asking how domestic fuel prices had increased by Rs30 over the same period. Malik responded that the comparison was misleading because domestic petrol and diesel prices are based on refined petroleum products rather than crude oil. The minister also defended the current tax structure, saying the petroleum levy was lower than the level imposed during the war period. He added that reducing the levy would be difficult because the International Monetary Fund would not agree, although an alternative source of revenue could make such a reduction possible. The committee also heard from Ogra officials, who defended the new pricing mechanism. Ogra Acting Chairman Nabeel Ahmed Awan said daily prices continue to be calculated using the seven-day average of international market prices. If global oil prices fall, he said, the reduction is gradually passed on to consumers over seven days. Likewise, any increase in international prices is reflected over the same period. He maintained that the new system benefits consumers by eliminating opportunities for short-term profiteering. "Those who used to create a false impression in the market to make money will no longer be able to do so," he said. Also Read: Govt shifts to daily POL pricing amid global headwinds Ogra officials also informed the committee that the current customs duty on petrol stands at Rs18.11 per litre. The hearing briefly turned tense when committee members questioned why they had not received the working paper before the meeting. When the acting Ogra chairman responded by asking, "What is a working paper?", Senator Abro rebuked him, saying, "You don't even know what a working paper is? Have you come from another planet?" Earlier in the meeting, Malik said the process to appoint a permanent Ogra chairman had been initiated on time. However, interviews failed to produce a suitable candidate, and the appointment process has since been restarted. The federal government reshuffled Ogra's leadership in April, removing then-acting chairman Shahzad Iqbal and appointing Nabeel Ahmed Awan, a BS-22 officer of the Pakistan Administrative Service and secretary of the Establishment Division, as acting chairman for an initial three-month term while the search for a permanent chairman continues.

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