ISLAMABAD:
As international oil prices lose steam amid easing tensions in the Middle East, the government is weighing what could be one of the biggest reductions in oil prices in recent years, with petrol and diesel prices expected to drop by more than Rs 55 per litre.
Working papers prepared by the Petroleum Division, Pakistan State Oil (PSO) and the Oil and Gas Regulatory Authority (Ogra) are under scrutiny as officials work on a significant downward adjustment in domestic fuel prices.
Sources said Prime Minister Shehbaz Sharif has specifically directed Petroleum Minister Ali Pervaiz Malik to explore ways to offset the fuel price hike announced on March 7.
According to officials familiar with the discussions, the prime minister was unhappy with the scale of the earlier hike and has since pushed for meaningful relief for consumers.
The government is now exploring the possibilities of a reduction that could exceed the increase of Rs 55 per litres, which were imposed in March.
The move has been made possible by a sharp drop in international crude oil prices. Officials noted that Arab Light crude, the benchmark used to determine the prices of petroleum products in Pakistan, has fallen by about $16 per barrel. barrel over the past week and has fallen to nearly $80 per barrel. barrel.
The expected reduction has triggered significant activity in the oil sector. Sources said some oil marketing companies have started lobbying against a one-time cut of more than Rs55 per liter and are instead favoring a gradual reduction spread over several price reviews.
But officials maintain that the government is assessing the extent to which the full benefit of lower international prices can go directly to consumers.
Global oil markets continued their downward trajectory on Thursday as crude oil prices fell by more than $1 a barrel. barrel after the United States and Iran reportedly signed a tentative deal aimed at ending hostilities, reopening the Strait of Hormuz and easing U.S. sanctions on Iranian oil exports.
The development significantly improved expectations for global oil supplies.
Oil Minister Ali Pervaiz Malik said on Thursday that Prime Minister Shehbaz Sharif had asked the authorities to ensure that the gains from falling global oil prices were passed on 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 directed that this benefit be immediately passed on to the public”.
He also announced that the government had decided to create greater transparency in fuel prices by introducing a new mechanism.
“The minister said that ‘a high-level committee had been set up to devise a transparent weekly fuel price mechanism … so that in future, when necessary, the public can understand the reasons for changes in prices’.”
According to Malik, the exercise would be conducted “in full consultation with all stakeholders”.
