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 fall by more than Rs 55 a litre.
Working papers prepared by the Petroleum Division, Pakistan State Petroleum (PSO) and the Oil and Gas Regulatory Authority (Ogra) are being examined as officials work on a major downward revision of domestic fuel prices.
Sources said Prime Minister Shehbaz Sharif has specifically directed Oil 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 dissatisfied with the size of the previous increase and has since pushed for significant relief for consumers.
The government is now examining options for a reduction that could exceed the Rs 55 per liter increase imposed in March.
The measure has been possible thanks to a sharp drop in international crude oil prices. Officials noted that Arab Light crude oil, the benchmark used to determine oil product prices in Pakistan, has fallen by around $16 per barrel over the past week, falling to nearly $80 per barrel.
The planned reduction has caused considerable activity in the oil sector. Sources said some oil marketing companies have started lobbying against a one-time cut of more than Rs 55 per liter and are instead advocating a gradual reduction spread over multiple price revisions.
However, officials maintain that the government is evaluating the extent to which the full benefit of lower international prices can be passed directly to consumers.
Global oil markets continued their downward trajectory on Thursday, as crude oil prices fell more than $1 per barrel after the United States and Iran reportedly signed an interim deal aimed at ending hostilities, reopening the Strait of Hormuz and easing US sanctions on Iranian oil exports.
This development significantly improved expectations for global oil supply.
Oil Minister Ali Pervaiz Malik said on Thursday that Prime Minister Shehbaz Sharif had directed authorities to ensure that profits from the fall in 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 passed on to the public immediately.”
He also announced that the government had decided to bring greater transparency to fuel prices by introducing a new mechanism.
“The minister said ‘a high-level committee had been constituted to devise a transparent weekly fuel pricing mechanism… so that in future, when necessary, the public can understand the reasons for price changes.'”
According to Malik, the exercise will be carried out “in full consultation with all stakeholders.”
