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. 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.