Pakistan's petroleum product prices remain elevated compared to pre-US-Iran conflict levels, with petrol and high-speed diesel (HSD) in the international market costing $15 to $20 per barrel more than before the war, according to Federal Minister for Petroleum Ali Pervaiz Malik.
Government Unable to Reduce Pump Prices Despite Lower Levies
Speaking to media after a parliamentary panel meeting, Malik explained that although crude oil prices have returned to pre-war levels, the prices of petrol and HSD are still significantly higher. Since Pakistan imports about 70 percent of its petrol and 33 percent of its diesel requirements, the government has not been able to bring pump prices back to previous levels despite reducing the burden of levies, including the petroleum levy.
The minister noted that petroleum levy and carbon levy rates were actually higher on February 27 compared with current levels, indicating that the government has already reduced these taxes.
Standing Committee Raises Concerns Over Training Fund
Earlier, the Standing Committee on the Petroleum Division, chaired by Syed Mustafa Mehmood, MNA, questioned the utilization of the Petroleum Training Fund (PTF), particularly amounts deposited by exploration and production (E&P) companies for the provincial share. The committee sought details on how provincial energy departments have used the funds and expenditures for local inhabitants.
Global Refined Product Prices Remain High
Ali Pervaiz Malik briefed the committee on petroleum prices, LPG, and RLNG rates. He said global crude oil prices had returned to pre-war levels, but Pakistan's dependence on imported refined products kept domestic fuel prices elevated. During the crisis, petrol prices in the international market surged to $180-$190 per barrel, and diesel supplies became severely constrained. Premium, insurance, and shipping costs also increased multiple times.
Gradual Deregulation Underway
Malik said the government is gradually moving toward deregulation of petroleum product prices and wants to reduce its direct role. A committee constituted by Prime Minister Shehbaz Sharif has held three meetings to examine reforms, including the possibility of displaying petroleum prices daily. The supply chain is being monitored, and digitalization of the system is progressing.
Refinery Upgradation Policy Awaits Cabinet Approval
The minister said the refinery upgradation policy has been submitted to the cabinet, with approval expected by July 15 through the Economic Coordination Committee. After approval, the upgradation process will begin, and Pakistan aims to shift to Euro-V standard fuels. He assured lawmakers that consumers would not bear the financial burden of refinery inefficiencies. Removing the petroleum levy would reduce prices but require alternative revenue sources.
Energy Security Measures Underway
Malik said the government is working on strategic fuel reserves and infrastructure development. International studies have been commissioned, with two firms working on the project. Despite limited storage capacity, Pakistan managed the fuel crisis during the recent conflict. All fertilizer and power plants are operating, with only limited restrictions on domestic gas supply during meal hours. Offshore exploration activities are restarting after two decades, and circular debt is not expected to increase by year-end. Talks with the IMF on circular debt are ongoing.
LPG Pricing and Regulation Issues
Lawmakers questioned why official LPG prices are not implemented in the market and criticized OGRA for failing to enforce notified rates. Malik said LPG prices are linked to global propane and butane prices, with only 30-40 percent of demand met domestically. LPG auctions are halted due to a court stay order, and the government has approached the court through the Attorney General's Office. Implementation of LPG regulations is OGRA's responsibility.
Committee Recommendations
The committee recommended a dedicated meeting to examine the mechanism for determining petroleum product prices, including whether legal procedures have been followed and whether OGRA conducted public hearings. A detailed report is to be submitted at the next meeting.
On the training fund, the Petroleum Division and provincial governments briefed the committee. Billions of rupees collected under PTF from 2012-2020 were spent on international litigation by the federal government. Provinces currently hold an unutilized balance of Rs 1,956.49 million. The committee recommended a separate meeting on the fund and directed the Petroleum Division to submit a comprehensive report on status, utilization, outstanding contributions, and applicable rules. Members emphasized transparent and effective use for local communities in exploration areas.
