Petroleum Division Recommends Revisions to Diesel Pricing Formula; Target Set for Complete Petrol Market Deregulation by June 2027
ISLAMABAD: In a significant policy shift in the field of energy security and price formula in the case of high speed diesel, the Petroleum Division has recommended for the overhaul of the pricing formula of high speed diesel in Pakistan.In a radical change of policy with regard to energy security and pricing structures, the Petroleum Division has called for total revamp of pricing formula for high speed diesel in Pakistan.
The suggested cut in the refining margin from $41 to $30 per barrel under special or emergency circumstances is included in the proposal, sources in the Ministry of Petroleum said. In this type of situation, the cost of diesel would be determined by the current price of crude oil and the new $30 profit. Besides, it is recommended that the 10% customs duty now being applied to diesel be removed and replaced with true import duty regimes and that OGRA and KPMG develop a new framework, based on crude oil, for conflict situations.
The Petroleum Policy Revisions and Deregulation Roadmap provides a summary of the key highlights of the new policy.
Proposals have been made to make Pakistan State Oil (PSO) as the exclusive importer of diesel and charged the additional expenses through Inland Freight Equalization Margin (IFEM). Authorities have assessed their depot network across the country and determined that the inclusion of 6 depots in the IFEM freight calculation pool will no longer be required from January 1, 2027 to reduce freight costs. The oil firms will be required to keep a stock reserve of their products at these sites by OGRA.
Petrol Pricing Continuity: Unlike the proposed changes in the diesel systems, it has been agreed to keep the existing system of petrol pricing as is for the time being without any changes.
Target for Complete Petrol Deregulation: Pakistan has targeted to complete the deregulation of retail petrol market by June 30, 2027. This transition has been ordered to be facilitated by a ‘phased roadmap’ and the Oil and Gas Regulatory Authority (OGRA) to provide a comprehensive policy statement on the oil sector consolidation.