ISLAMABAD:
As international oil prices falter amid easing tensions in the Middle East, the government is considering what could be one of the biggest reductions in oil prices in recent years, with petrol and diesel rates set to fall by more than Rs55 per litre.
Working papers prepared by the Petroleum Division, Pakistan State Oil (PSO) and the Oil and Gas Regulatory Authority (Ogra) are under review as officials work on a significant downward revision in domestic fuel prices.
Sources said Prime Minister Shehbaz Sharif had specifically instructed Oil Minister Ali Pervaiz Malik to explore ways to compensate for the fuel price increase announced on March 7.
According to officials close to the discussions, the prime minister was unhappy with the size of the previous increase and has since pushed for significant relief for consumers.
The government is currently reviewing options for a reduction that could exceed the 55 rupees per liter increase imposed in March.
This decision was made possible by a sharp drop in international crude prices. Officials noted that Arab Light crude, the benchmark used to determine prices of petroleum products in Pakistan, fell about $16 per barrel over the past week, sliding to nearly $80 per barrel.
The expected reduction has triggered considerable activity in the oil sector. Sources said some oil marketing companies have started lobbying against a one-time reduction of over Rs55 per liter and are instead advocating a gradual reduction spread over several price revisions.
However, officials say the government is assessing the extent to which the full benefits of lower international prices can be passed on directly to consumers.
Global oil markets continued their downward trajectory on Thursday as crude prices fell more than $1 per barrel after the United States and Iran reportedly signed an interim agreement aimed at ending hostilities, reopening the Strait of Hormuz and easing U.S. sanctions on Iranian oil exports.
This development has significantly improved expectations for global oil supplies.
Oil Minister Ali Pervaiz Malik said on Thursday that Prime Minister Shehbaz Sharif had asked authorities to ensure that gains from falling global oil prices were transferred to the public without delay.
In a social media post on Thursday, the Oil Minister said: “International oil prices are falling and the Prime Minister has ordered that this benefit be immediately passed on to the public.”
He also announced that the government had decided to bring greater transparency in fuel pricing by introducing a new mechanism.
“The minister said ‘a high-level committee had been constituted to design a transparent weekly fuel pricing mechanism…so that in future, whenever necessary, the public could understand the reasons for price changes’.”
According to Malik, the exercise would be carried out “in full consultation with all stakeholders”.
