KARACHI: The government’s proposal to introduce daily petroleum price revisions represents an important policy opportunity to modernize Pakistan’s fuel pricing framework, but changing the frequency of price notifications alone will not deliver meaningful energy sector reform, a leading economic analyst said.
Shahid Anwar, former secretary general of the Federation of Pakistan Chambers of Commerce and Industry, said the public debate has largely centered on how often petroleum prices should change.
“The real policy question is not the frequency of price revisions,” Anwar said. “The real question is who should bear the market risk arising from fluctuations in international oil prices: the government, oil marketing companies or consumers. Unless this issue is addressed, daily pricing will remain an administrative adjustment rather than a meaningful economic reform.”
The government is considering shifting from weekly to daily petroleum price reviews under a new mechanism that would authorize the Oil and Gas Regulatory Authority to determine fuel prices, according to reports from the Petroleum Division. The proposal follows heightened volatility in global oil markets amid the renewed closure of the Strait of Hormuz.
Anwar said daily petroleum pricing is an internationally accepted market practice that improves price transmission, reduces market distortions and strengthens financial discipline across the petroleum supply chain.
He noted that international experience shows market-based fuel pricing mechanisms work more efficiently because retail prices reflect changes in global oil prices and exchange rate movements in a timely and transparent manner.
“However, daily petroleum pricing is an operational reform, not an economic reform,” Anwar said. “Changing the frequency of fuel price revisions alone will not strengthen Pakistan’s energy sector. The real test is whether the new mechanism delivers transparency, fair competition, efficient price transmission and greater public confidence.”
Anwar outlined four fundamental policy principles to guide successful implementation:
Transparency must be non-negotiable, he said, with every daily price notification clearly disclosing the contribution of international oil prices, exchange rate movements, petroleum levy, taxes, dealer commissions, freight adjustments and oil marketing company margins.
“Consumers have the right to know how the final retail price is determined,” he said. “Transparency is the foundation of policy credibility and public trust.”
Fiscal objectives should not undermine economic competitiveness, Anwar said, noting that while petroleum products are an important source of government revenue, excessive reliance on fuel taxation increases transportation, logistics and production costs, fuels inflation and weakens the competitiveness of Pakistani industry and exports.
Market discipline must apply equally to all stakeholders, he said. “If consumers are expected to absorb increases in international oil prices immediately, they should also receive the full and timely benefit whenever global prices decline,” Anwar said.
A market-based pricing mechanism must work fairly in both directions. Prices should move down as quickly as they move up. Anything less undermines public confidence and weakens the credibility of reform.”
Petroleum pricing should become part of a broader energy reform agenda, Anwar said, adding that daily price revisions alone cannot reduce Pakistan’s energy vulnerability.
“The larger priorities remain modernizing refineries, reducing dependence on imported fuels, encouraging domestic energy production, accelerating investment in renewable energy, promoting energy conservation, improving energy efficiency and strengthening the country’s long-term energy security.”
Anwar recommended the government publish a comprehensive daily price build-up explaining every component of the retail fuel price. He also called for effective regulatory oversight to ensure reductions in international oil prices are passed on to consumers promptly and in full.
“I urge the honorable minister for energy to ensure that daily petroleum pricing becomes the foundation of a transparent, predictable and competitive energy market,” Anwar said. “If this reform strengthens public confidence and market integrity, it will be remembered as a landmark step in Pakistan’s energy sector.”
The proposal has drawn opposition from the Oil Marketing Association of Pakistan, which warned that immediate implementation could create operational and financial challenges for oil marketing companies. The All Pakistan Petrol Pump Owners Association has also rejected the plan and warned of potential protests
