The government will decide on the deregulation of petroleum products in a crucial meeting today

A meeting is to be held today regarding the possible delegation of the authority to set fuel prices to oil marketing companies (OMCs), sources in the petroleum ministry confirmed.

Petroleum Minister Musadik Malik will chair the meeting, which will consider the devolution of power to set prices of petroleum products to OMCs, following a desk order issued by Prime Minister Shehbaz Sharif yesterday.

In the ministerial order, the prime minister directed the Directorate of Petroleum to finalize and present the deregulation framework for the petroleum sector. Oil and Gas Regulatory Authority (OGRA) Chairman Masroor Khan is expected to brief on the proposal to give pricing power to oil trading companies.

According to sources, if the AMCs get the power to set fuel prices, daily price changes could become the norm. The government aims to fix the oil levy at Rs 80 while devolving the remaining powers to the OMCs.

The government is reportedly currently compensating OMCs for exchange differences on oil imports and issuing refunds for provincial sales tax on services. In the last financial year, Rs 65 billion was refunded to OMCs for sales tax on services, they added.

Also read: Oil traders may set fuel prices

The Pakistan Petroleum Dealers Association (PPDA) has expressed its support for the Prime Minister’s decision to end government intervention in setting oil prices. However, the association believes that OGRA and not the OMCs should set the prices of petroleum products.

“OGRA is fit to protect the interests of all stakeholders and consumers in a professional manner,” PPDA spokesperson Hassan Shah said in a statement issued on Thursday. He argued that giving pricing power to OMCs would be akin to “throwing consumers to the wolves”.

“Pakistan’s OMCs are already profiteering and miss no opportunity to make illegal profits. Giving them more power will have disastrous consequences for the country’s economy,” he added.

Shah stressed the need for a thorough study and evaluation of the benefits and impacts before making a final decision.