The government on Thursday raised the prices of petrol and high-speed diesel by Rs. 2.84/liter and Rs. 2.28/liter, respectively, passing on the full impact of volatility in international oil markets to citizens.
Following the revision under the daily price fixation mechanism, applicable for Sept. 4, consumers would pay Rs. 349/liter for petrol and Rs. 374.31/liter for diesel. These prices include Rs. 114/liter in taxes and duties on petrol and Rs. 100/liter on diesel.
According to Petroleum Minister Ali Pervaiz Malik, fuel prices are fixed on a daily basis due to fluctuations in international market prices amidst renewed hostilities between Iran and the U.S. in a bid to boost transparency and pass on the full impact to consumers immediately.
The daily price fixation mechanism was implemented in July, replacing a weekly mechanism implemented in early March. Prior to the outbreak of the Middle East conflict, the government used to set prices fortnightly.
Both the All Pakistan Dealers Association and the Transport Goods Association have rejected the daily pricing mechanism, with the latter suspending a strike over assurances the price fixation mechanism would be revised. The Jamaat-e-Islami, meanwhile, has been protesting against high fuel prices for over a week, with the party demanding the abolition of the petroleum levy and the fixation of petrol at Rs. 225/liter. It has vowed to continue its demonstrations until the government takes practical steps to address its concerns.
Primarily used in private transport, changes to the price of petrol tend to impact the middle and lower-middle classes, who use it for their daily commute. Changes in diesel prices, meanwhile, are considered inflationary, as increased hike the cost of heavy transport and can drive up the prices of essential commodities.
Deregulation plans
On Thursday, the petroleum minister chaired a meeting of the committee on petroleum pricing, deciding in principle to empower the Oil and Gas Regulatory Authority (OGRA) to switch diesel pricing to crude-based calculations without seeking repeated approvals from the federal cabinet if there is an unusual rise in rates.
Reportedly, the meeting also considered the daily price fixation mechanism and decided to proceed with plans to completely deregulate fuel pricing by June 2027. This would, in effect, trigger more frequent changes in petrol prices but could potentially offer competitive pricing between oil marketing companies.