Govt to roll out phased deregulation of oil sector

The government has decided to move ahead with the phased deregulation of Pakistan's oil sector, aiming to increase competition, improve transparency and deliver better value to consumers.

 

The decision was taken during the fifth meeting of the committee reviewing the petroleum pricing mechanism, chaired by Federal Minister for Petroleum Ali Pervaiz Malik. The committee agreed in principle to transition from a controlled pricing regime to a deregulated market-based system.

 

Officials said Pakistan's experience with deregulated High Octane Blending Component (HOBC) prices has shown that competition can benefit consumers through lower prices and improved services. They also pointed to the telecommunications sector as an example of how liberalisation has encouraged efficiency, innovation and lower tariffs.

 

The committee reviewed recommendations from its sub-groups, while KPMG presented a comparative study of petroleum pricing and taxation frameworks across the region. Members also welcomed the shift to daily petroleum price updates and the launch of OGRA's online pricing dashboard, which provides real-time price information and pricing formula details to improve transparency.

 

The meeting also examined proposals for strategic petroleum reserves, a price stabilisation fund, and the digitisation of the petroleum supply chain. It further discussed the moratorium on new oil marketing companies (OMCs), the Inland Freight Equalisation Margin (IFEM) mechanism and the issue of a potential windfall tax.

 

The petroleum minister said deregulation would be implemented through a clear roadmap with measurable milestones, with the objective of promoting competition, efficiency, transparency and consumer protection in the oil sector.