Pakistan has overhauled its petroleum pricing mechanism, replacing the previous system of fortnightly ministerial reviews with a daily OGRA-determined price based on a rolling seven-day average of international crude prices, Federal Petroleum Minister Ali Pervaiz Malik announced (Express Tribune; Aaj English TV; ARY News).
Under the new system, OGRA computes the petrol and diesel ex-depot price daily using the average price of benchmark crude and refined products over the previous seven days, then publishes the result on its official website. The price notified by OGRA takes effect immediately, with no further cabinet or ministerial approval required. Malik said the change would make the pricing process “clearer” and allow consumers to understand how fuel prices are derived.
The minister described the shift as a step toward eventual deregulation of petroleum products — a goal Pakistan has articulated in successive economic frameworks without implementing.
Significance
The previous fortnightly system created a two-week lag between international price movements and their pass-through to Pakistani consumers. This buffered sudden spikes — but also delayed pass-throughs of price declines, creating fiscal asymmetry. Under the daily system, the buffer is reduced to seven days (the rolling average), meaning any sustained international price movement — including upward moves driven by the Strait of Hormuz crisis — translates to pump prices within roughly a week.
The timing of the announcement is notable. The daily mechanism was introduced at a moment when international oil prices are elevated and volatile because of the US-Iran conflict. The July 18 revision under the new system produced a Rs31.05 per litre diesel increase — likely larger than any single fortnightly revision would have produced, because it captures a period of sharper-than-normal international price movement.
For the IMF, daily deregulated pricing is consistent with the Fund’s structural reform preferences for Pakistan’s energy sector. Pakistan’s previous arrangement — politically managed fortnightly reviews — allowed the government to delay pass-throughs for political reasons, creating circular debt accumulation. Daily OGRA-set prices remove that political discretion, at the cost of exposing consumers to more immediate price volatility.
