Daily fuel pricing mechanism reviewed: Senate panel rejects appointment of Ogra interim chairman

ISLAMABAD: The Senate Standing Committee on Petroleum has rejected the appointment of an interim chairman for the Oil and Gas Regulatory Authority (Ogra) and raised concerns over the government’s move to fix fuel prices daily.

The committee, which met here on Thursday with Senator Umar Farooq in the chair, called for the appointment of a permanent OGRA chairman and a reversion to a fortnightly fuel pricing schedule.

The panel reviewed the mechanism for daily petroleum price determination, deferred discussion on the criteria for the appointment of chairpersons and managing directors of state-owned petroleum companies and the composition of their Boards of Directors.

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A member of the committee, Saifullah Abro, described the daily fuel pricing mechanism as a “slow poison” for consumers. Consumers do not know what today’s price is or what tomorrow’s will be. They can neither live nor die, he added.

Abro noted that international crude oil prices had risen from USD 76 per barrel on July 11 to USD 82 on July 17, but domestic fuel prices had increased by Rs30 over the same period.

Senator Qurat-ul-Ain Marri said that OGRA is not an independent authority as a bureaucrat is the interim chairman of the authority.

“The authority rests with the government,” she rejected the argument of Chairman OGRA, Nabeel Ahmed Awan, that the authority is independent in working out the fuel pricing.

The chairman OGRA briefed the committee that petroleum prices are calculated using a seven-day rolling average of Platts international benchmarks. He maintained that the daily pricing mechanism protects consumers by spreading the impact of international price fluctuations over seven days, thereby minimizing sudden price shocks, especially due to the ongoing US-Iran conflict. He added that the new mechanism primarily discourages speculative practices aimed at earning illegitimate profits. Members of the committee also stressed the need for greater digitization of the petroleum supply chain to curb fuel adulteration, smuggling and hoarding.

The committee expressed concern over the high tax burden on petroleum products. Representatives of the Petroleum Dealers Association informed the committee that frequent price revisions were creating operational difficulties for dealers. The chairman of the committee directed the OGRA to engage all relevant stakeholders, including the Dealers Association, and submit a practical proposal for addressing these concerns.

The committee also took serious notice of the absence of the Managing Director of Pakistan Refinery Limited (PRL), despite the company being a state-owned entity, and observed that the required information had not been provided. The committee considered initiating a privilege motion against the Managing Director of PRL. The Petroleum Division was further directed to submit complete details of the Boards of Directors and senior management of all government-owned petroleum companies.

Reviewing the implementation of its previous recommendations, the committee expressed dissatisfaction over the failure of Sui Southern Gas Company (SSGC) to implement the committee’s directives, provide details of its Board of Directors, and tender a formal apology over remarks discouraging the Senate Standing Committee from discussing certain matters. The committee considered moving a privilege motion against SSGC.

The Petroleum Division was also directed to review the tenure of Board members serving beyond the prescribed period and submit a comprehensive report.

The committee further took strict notice of the absence of performance audits of oil rigs and directed the relevant authorities to submit the audit report within seven days. It also reviewed issues relating to LPG quotas and licensing and directed OGRA to convene a meeting with all stakeholders and submit a detailed report to the committee.

The Senate body held a detailed discussion on the recently introduced daily petroleum pricing mechanism and questioned the rationale for replacing the previous fortnightly pricing system. The federal minister for Petroleum informed the committee that the federal government had depoliticized the pricing process by empowering the OGRA, as the independent regulator, to determine petroleum prices.

Earlier, Minister for Petroleum, Ali Pervaiz Malik defended the government’s daily fuel pricing mechanism, saying it had ended the practice of oil companies restricting petrol supplies in anticipation of price revisions under the previous system.

Malik maintained petrol and diesel prices continue to be calculated using a seven-day rolling average of international market prices, despite now being revised daily instead of fortnightly.

He said the government had delegated the authority to determine petroleum product prices to the OGRA, which is responsible for bringing all stakeholders together before finalising prices.

He further said the pricing methodology and the benchmark used for calculations are already available on OGRA’s website, adding that Prime Minister Shehbaz Sharif had directed the regulator to publish the formula in Urdu to improve transparency.

Malik responded that the comparison was misleading because domestic petrol and diesel prices are based on refined petroleum products rather than crude oil.

Explaining the new system, the minister said international benchmark prices are sourced from Platts before government taxes and oil companies’ margins are added to determine domestic retail prices.

He argued that the shift to daily pricing had addressed a major flaw in the previous mechanism. “When prices were revised weekly, companies would see the three-day average emerging and reduce petrol supplies accordingly,” Malik said. “Now prices are determined daily using the seven-day average.”

The minister also defended the current tax structure, saying the petroleum levy was lower than the level imposed during the war period. He added that reducing the levy would be difficult because the International Monetary Fund would not agree, although an alternative source of revenue could make such a reduction possible.

Copyright Business Recorder, 2026