Islamabad: Seeking to address concerns of oil marketing companies (OMCs) and refineries, the Petroleum Division of the Federal Ministry of Energy has assured that in the future, petrol prices will be determined on the basis of actual import premium, while the existing weekly pricing system will be maintained to reduce the financial pressure arising from recent policy changes.
In a key meeting held in Islamabad on Tuesday, Federal Minister for Petroleum Ali Pervez Malik and Secretary Petroleum Hamid Yaqoob Sheikh met with the chief executive officers of various OMCs and refineries. The aim of the meeting was to hear the industry’s concerns on the current fuel pricing formula and discuss the future course of action.
During the meeting, government representatives clarified that there is no intention to make any further changes in the weekly pricing system in the near future. He said that the future petrol prices will be determined based on the import premium of $15.85 per barrel of the latest cargo imported by Pakistan State Oil (PSO).
According to officials, the prices of high-speed diesel will continue to be determined keeping in mind the import premium received from Kuwait Petroleum, which is about $5 to $6 per barrel.
In the meeting, Oil Companies Advisory Council (OCAC) Chairman Asif Iqbal expressed serious concerns on behalf of the industry and said that during the last three months, the diesel price formula has been changed seven times while the petrol formula has been changed four times, which has put the entire sector in a state of uncertainty.
He took the stand that the recent price changes have affected the profitable performance of the industry for a year in a single day. According to him, such unexpected policy changes discourage foreign investment and affect investor confidence.
Representing the refinery sector, representatives of Synergico Petroleum pointed out that a large quantity of smuggled high-speed diesel is available in the local market, which is severely affecting legitimate businesses. They demanded complete deregulation of prices and effective action against smuggling.
On the other hand, representatives of companies with international investments also expressed concerns. According to them, as a result of recent policy decisions, some companies have had to bear losses due to a single price change that are more than the total profit of the last year.
Industry representatives also raised the issue of delay in payments of billions of rupees by OGRA in respect of price difference claims. They said that this situation is increasing pressure on the working capital of the companies, while additional costs incurred by banks on foreign exchange transactions are also adding to the financial difficulties.
Most of the companies in the meeting demanded the government restore the pre-war pricing system so as to improve business stability and investment climate.
Federal Minister for Petroleum Ali Pervez Malik assured that a committee has been formed on the directions of the Prime Minister to review the petroleum pricing system, and the views of the industry will be included in the consultation process. He said that complete deregulation will be a gradual process and cannot be implemented immediately.
According to experts, the ongoing consultations between the government and the oil industry will play a significant role in determining the future of the country’s fuel policy in the coming weeks, while transparency and stability in pricing will prove to be key factors in promoting investment.
