Govt sets June 2027 target for deregulation of petrol price

An employee fills the tank of a motorbike at a fuel station in Islamabad on June 16, 2025. — AFP Govt's committee reviews petrol pricing formula. Diesel intervention guidelines approved for emergencies. Govt favours fuel reserves over stabilisation fund. The federal government set June 2027 as its target for petrol price deregulation, seeking to overhaul the existing fuel pricing framework and promote competition in the petroleum supply chain. The target was agreed at the meeting of the Petroleum Pricing Committee, chaired by Petroleum Minister Ali Pervaiz Malik, which reviewed reforms aimed at making fuel prices more transparent and predictable while shielding consumers from excessive price volatility, The News reported on Friday. The committee approved guiding principles for government intervention in diesel prices during emergencies, including clearly defined triggers for price shocks and potential corrective measures. It also reviewed the petrol pricing formula as part of the transition toward deregulation. The committee agreed to submit its final recommendations to Prime Minister Shehbaz Sharif for approval. It also approved a revised methodology for calculating the Inland Freight Equalisation Margin (IFEM), a key component of petroleum pricing. The Oil and Gas Regulatory Authority (Ogra) said its audit of IFEM for FY26 will be completed by the end of CY26. The committee directed Ogra to submit recommendations on the consolidation and performance of existing oil marketing companies, with particular emphasis on adopting global best practices and modern technologies. It also reviewed proposals for a petroleum price stabilisation fund based on international models. However, the committee said that as the market moves towards eventual deregulation, maintaining adequate fuel reserves will be more appropriate than establishing a stabilisation fund. The reforms are intended to gradually shift Pakistan from administered fuel prices towards a competitive market while limiting the impact of abrupt international price swings on consumers. A subcommittee headed by Mir Naeem Ghauri will also meet the chairperson of the Federal Board of Revenue (FBR) to assess whether the petroleum-sector taxation regime needs adjustment in response to changing market conditions.