Government Introduces Guidelines for Daily Petroleum Price Mechanism

The federal government has introduced policy guidelines to overhaul Pakistan’s petroleum pricing system by replacing the existing periodic fuel price review mechanism with a daily market-based pricing model. Under the proposed framework, the Oil and Gas Regulatory Authority (Ogra) will independently announce daily ex-depot fuel prices without requiring prior approval from the federal government, while the Directorate General (Oil) will be notified after the prices are published.

 

The new mechanism aims to align domestic fuel prices more closely with international oil market movements, improve transparency, and reduce administrative involvement in routine pricing decisions. Prices announced on Fridays will remain applicable over the weekend.

 

The pricing formula will be based on a rolling seven-working-day average of Platts Arab Gulf benchmark prices. Petrol prices will track Platts MS 92 RON assessments, while high-speed diesel (HSD) prices will be linked to Platts 10 ppm diesel benchmarks. Import-related costs, including premiums, customs duties, and incidentals, will be calculated using recent PSO import data or year-to-date averages when no cargoes are imported.

 

Despite the shift to daily pricing, the federal government will continue to regulate the petroleum levy, with annual rates set by the Finance Division and any mid-year revisions requiring approval from the finance ministry.

 

The policy also grants Pakistan State Oil (PSO) exclusive authority to import HSD throughout FY27, limiting private oil marketing companies (OMCs) from importing diesel. Meanwhile, private OMCs will be required to meet import allocations and mandatory refinery uplift obligations, with companies failing to comply facing a nine-month suspension from receiving new import allocations.

 

Additionally, Ogra will publish daily Platts Arab Gulf benchmark prices for petrol and diesel on its website to enhance transparency. Other elements of the pricing formula, including exchange rate adjustments, Refinery Regulatory Duty (RRD), Inland Freight Equalisation Margin (IFEM), and fuel quality adjustments, will remain unchanged. The daily pricing methodology will also apply to superior kerosene oil (SKO) and light diesel oil (LDO).