The government has expedited the process of deregulating petroleum product prices so as to shift the brunt of public criticism to oil marketing companies (OMCs).
For the purpose, sources said, Prime Minister Shehbaz Sharif has directed the authorities for a phased transfer of regulating power to the oil marketing companies.
Following the prime minister’s directive, Petroleum Minister Musadik Malik has summoned an important meeting for tomorrow to discuss the feasibility of the plan.
Also read: Trader-Friendly Special Procedure expanded to 42 cities on IMF dictation
Meanwhile, the Oil and Gas Regulatory Authority (OGRA) chairman has been tasked to prepare a report on the effects of deregulating prices and develop a framework for implementation.
The final framework for deregulating petroleum prices will be presented to the Prime Minister for approval.
Also in April, amid increasing fuel prices and the oil industry’s complaints over the rising influx of smuggled oil products, the government took a step to shift the brunt of public criticism to oil marketing companies.
In a directive, the petroleum division has asked the Oil and Gas Regulatory Authority (Ogra) “to share a presentation on the analysis and implications of deregulation of petroleum products” within three days.
The directive said the presentation should particularly cover the “in-country freight equalisation margins (IFEM) and other related aspects”, it said.
The Prime Minister’s Office had sought urgent finalisation of a “deregulation framework for the petroleum sector”.
Also read: Pakistan’s inflation will remain high in current FY, ADB predicts
The government has been under public criticism for rising petroleum product prices, even though it was not at liberty to change fixed tax rates on various products under the donor-dictated pricing mechanism.
The government’s only role at present is limited to announcing fortnightly fuel prices calculated by Ogra to pass on the impact of the international market and exchange rate to consumers.
The oil industry has also been criticising the government for doing little to stop the massive smuggling of low-quality and cheaper products, particularly from Iran.
This smuggling affects the regulated oil industry’s market share and profitability, and causes the government annual revenue loss of over Rs230 billion.
An official told Dawn that while the final deregulation framework would come out with the approval of the federal cabinet and the Special Investment Facilitation Council (SIFC), the deregulation of petrol and high-speed diesel (HSD) pricing would mean an end of uniform pricing across the country and the oil companies would be free to set their own prices for different cities and towns.
