The Petroleum Ministry has submitted a long-awaited refinery upgrade policy to the federal cabinet and expects its approval shortly as part of efforts to shift the country toward Euro-V compliant fuels, Petroleum Minister Ali Pervaiz Malik told a parliamentary committee on Tuesday.
Addressing a meeting of the National Assembly Standing Committee on Petroleum, he said the policy could be approved in the next meeting of the cabinet. Subsequently, he said, the government would seek clearance from the Economic Coordination Committee.
Implementation of the policy, he said, would begin immediately after its approval, enabling local refineries to upgrade their facilities and produce cleaner Euro-V standard fuels. “The government will not pass the burden of refinery inefficiencies on consumers,” he claimed, adding Prime Minister Shehbaz Sharif had decided against imposing any additional financial burden on petroleum consumers.
The minister said Pakistan aims to gradually deregulate the petroleum sector, allowing the government to move away from direct price-setting while continuing to monitor the fuel supply chain. He added that authorities were also working to digitalize the petroleum supply chain and were considering displaying Platts benchmark prices on a daily basis to improve market transparency.
Malik said the country’s fuel supply situation had improved after disruptions caused by the recent Iran war, noting international crude oil prices had fallen below pre-war levels. He recalled that crude oil traded at about $71/barrel and diesel at $78/barrel before the conflict, but freight, insurance and premium costs surged sharply during the crisis, driving gasoline prices to between $180-190/ton and a shortage of diesel.
Despite the decline in crude oil prices, petrol and diesel prices remain elevated, he said. Pakistan imports around 70% of its petrol requirements and about 33% of its diesel consumption, making domestic fuel prices vulnerable to international market fluctuations, he emphasized.
The minister admitted that the petroleum levy on petrol had exceeded Rs. 80/liter under commitments made with the International Monetary Fund (IMF).
On energy security, Malik said the government was working on strategic petroleum reserves, with two firms conducting studies on the matter. He said offshore oil and gas exploration would begin later this year for the first time in two decades.
The minister said Pakistan had successfully managed fuel supplies during the recent regional crisis despite limited storage capacity and infrastructure, ensuring uninterrupted operations of fertilizer plants and power stations, while only limited restrictions were imposed on domestic gas usage during meal times. On the circular debt issue, he said the government was in discussions with the IMF and was confident there would be no increase in the energy sector’s circular debt by the end of FY27.
During the meeting, committee members expressed concern over the non-utilization of Corporate Social Responsibility (CSR) funds in Sindh and delays in spending similar funds in Balochistan. Provincial officials attributed the delays to the absence of implementation guidelines and force majeure declarations by companies. Committee member Talal Badr questioned the use of CSR funds by the Khyber-Pakhtunkhwa government for hiring consultants and sought details on the payments.