The government is planning to deregulate petrol prices by June 2027, paving the way for pump owners and oil marketing companies to play a greater role in determining fuel prices.
The decision was discussed by the Petroleum Pricing Committee during a meeting chaired by Petroleum Minister Ali Pervaiz Malik on Thursday.
The committee reviewed proposals to replace the existing petrol pricing mechanism with a market-based system. The transition is expected to be gradual, with measures aimed at preventing sudden and excessive price shocks for consumers.
The committee agreed on June 2027 as the tentative target for petrol price deregulation and will send its final recommendations to Prime Minister Shehbaz Sharif for approval.
Under the proposed system, petrol prices would eventually be determined by market conditions rather than through the current government-controlled mechanism.
The committee also discussed diesel prices and approved principles for government intervention during emergencies. These rules would establish specific triggers for major price shocks and allow authorities to take corrective measures when necessary.
Meanwhile, the committee approved a revised methodology for calculating the Inland Freight Equalization Margin (IFEM). The Oil and Gas Regulatory Authority (OGRA) said the IFEM audit for fiscal year 2026 would be completed by the end of calendar year 2026.
OGRA was also directed to submit recommendations regarding the consolidation and performance of existing oil marketing companies (OMCs).
The committee reviewed proposals for establishing a petroleum price stabilization fund but observed that maintaining sufficient fuel reserves may be more appropriate once the market is fully deregulated.
A separate subcommittee headed by Naeem Ghauri will meet the Federal Board of Revenue (FBR) chairman to review whether changes are needed in the taxation framework due to evolving market conditions.
If implemented, the reform would significantly change the way petrol prices are determined in Pakistan, giving market players much greater control over fuel prices from June 2027.
