ISLAMABAD: The federal government has said that if the ongoing tension in the Middle East and the uncertainty in the global oil market persist, the targeted fuel subsidy system can be reintroduced to protect the public from price shocks. The government has also reiterated its commitment to continue the process of deregulating the prices of petroleum products.
Federal Minister for Petroleum Ali Pervaiz Malik, while talking to reporters after a meeting of the Senate Standing Committee on Petroleum, said that if the tension between the US and Iran does not end in a few days, the government will consider reactivating the targeted subsidy model used earlier. According to him, in the past, the prime minister had provided a subsidy of Rs 130 billion, in which the provincial governments also participated later.
He said that the government is well aware of the economic difficulties faced by the public, but due to Pakistan’s IMF programme and limited financial resources, it is necessary to include the real cost of petroleum products in the prices. He said that if prices are kept artificially low, someone else will have to bear the financial burden.
According to the Petroleum Minister, the new daily pricing system has been introduced to promote transparency and gradually pass on the effects of changes in the global market to the consumers. According to him, this method will help avoid major price shocks on a weekly or fortnightly basis.
OGRA Chairman Nabil Awan told the Senate committee that the prices of petroleum products are fixed on the basis of the seven-day average standard of the global market. According to him, the current system helps in limiting the effects of sudden fluctuations in international prices.
During the meeting, senators presented different views on the new pricing system. Some members termed the method transparent, while others expressed reservations about it. The committee also expressed concern over the burden of taxes on petroleum products and the problems faced by dealers due to frequent price changes. The Chairman of the Committee directed OGRA to submit actionable proposals after consultation with the relevant stakeholders.
On the other hand, the government committee formed on the instructions of the Prime Minister also reviewed various proposals related to the new pricing system, digitalisation of the petroleum supply chain, the role of oil marketing companies, IFEM, windfall tax and reforms in the petroleum sector. The committee decided to prepare a reform roadmap for transparency, competition, consumer protection and an effective regulatory system.
