Ali Pervaiz Malik says daily reviews curb supply manipulation as senators criticize system, rising fuel prices
Minister of Petroleum and Natural Resources Ali Pervaiz Malik speaks during an interview with Reuters, during the Pakistan Minerals Investment Forum 2025, in Islamabad, Pakistan, April 8, 2025. Photo: Reuters
ISLAMABAD:
Oil Minister Ali Pervaiz Malik on Thursday defended the government’s daily fuel pricing mechanism, saying it had ended the practice of oil companies restricting gasoline supplies in anticipation of price revisions under the previous system.
On July 17, the federal government announced that prices for petroleum products would now be reviewed and reported daily, replacing the weekly pricing mechanism, as renewed tensions between the United States and Iran continue to drive volatility in global oil markets and raise concerns about fuel supply.
The decision came after the government had already moved from biweekly to weekly reviews of fuel prices after the first phase of the US-Iran conflict.
The move, however, drew criticism from shippers, businesses and opposition lawmakers, who argued that frequent price revisions would create uncertainty, increase transportation and freight costs and make it difficult for businesses and consumers to plan expenses. Petrol pump owners also threatened a nationwide strike before calling off the protest after the government assured them their concerns would be addressed.
During a meeting of the National Assembly’s Standing Committee on Petroleum, chaired by Umar Farooq, Malik said petrol and diesel prices continue to be calculated using a seven-day moving average of international market prices, even though they are now reviewed daily instead of bi-weekly.
He said the government had delegated the authority to determine prices of petroleum products to the Oil and Gas Regulatory Authority (Ogra), which is responsible for bringing together all stakeholders before fixing prices.
Malik said the pricing methodology and benchmark used for calculations are already available on the Ogra website, adding that Prime Minister Shehbaz Sharif had directed the regulator to publish the formula in Urdu to improve transparency.
Read more: The daily price of fuel drives the increase in freight transport
Explaining the new system, the minister said international reference prices are obtained from Platts before government taxes and oil company margins are added to determine domestic retail prices.
He argued that the change to daily prices had fixed a major flaw in the previous mechanism. “When prices were revised on a weekly basis, companies would see the three-day average emerge and reduce gasoline supply accordingly,” Malik said. “Prices are now determined daily using the seven-day average.”
The new mechanism, however, came under harsh criticism from committee members, particularly Senator Saifullah Abro, who described it as a “slow poison” for consumers. “The public does not know what the price is today or what it will be tomorrow,” he said. “People are given slow poison every day; they can’t live or die.”
Questioning the recent price increases, Abro pointed out that international crude oil prices had increased from $76 per barrel on July 11 to $82 on July 17, and asked how domestic fuel prices had increased by Rs 30 during the same period.
Malik responded that the comparison was misleading because domestic gasoline and diesel prices are based on refined petroleum products and not crude oil.
The minister also defended the current tax structure, saying that the oil tax was lower than the level imposed during the war period. He added that reducing the tax would be difficult because the International Monetary Fund would not agree, although an alternative source of revenue could make such a reduction possible.
The committee also heard from Ogra officials, who defended the new pricing mechanism.
Ogra acting president Nabeel Ahmed Awan said daily prices continue to be calculated using the seven-day average of international market prices. If global oil prices fall, he said, the reduction will be gradually passed on to consumers over seven days. Likewise, any increase in international prices is reflected in the same period.
He argued that the new system benefits consumers by eliminating opportunities for short-term speculation. “Those who used to create a false impression in the market to make money will no longer be able to do so,” he said.
Also read: Government shifts to daily POL pricing amid global headwinds
Ogra officials also informed the committee that the current customs duty on petrol is Rs 18.11 per litre.
The hearing briefly became tense when committee members asked why they had not received the working paper before the meeting.
When the acting president of Ogra responded by asking, “What is a working document?”, Senator Abro rebuked him by saying, “You don’t even know what a working document is? Do you come from another planet?”
At the beginning of the meeting, Malik said that the process to appoint a permanent Ogra president had been initiated on time. However, the interviews did not result in a suitable candidate and the appointment process has since restarted.
The federal government reshuffled Ogra’s leadership in April, removing then acting president Shahzad Iqbal and appointing Nabeel Ahmed Awan, a Pakistan Administrative Service BS-22 officer and secretary of the Establishment Division, as acting president for an initial three-month period while the search for a permanent president continues.
