Govt Decides to Change the Pricing Mechanism for Petroleum Products


The federal government has decided to change the method for fixing the prices of petroleum products. As per the new development, the prices will be fixed in 15 days instead of a monthly basis.

The Directorate General Petroleum Division of the Federal Ministry of Energy has informed the Oil and Gas Regulatory Authority (OGRA) and the Oil Companies Advisory Council via a letter that the new pricing method for petroleum products shall be made effective from September 1, 2020.


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As per the letter, the import price benchmark of Pakistan State Oil (PSO) has been removed for fixing the prices of petroleum products. Therefore, going forward, the Arab Gulf Pellets will be the benchmark for determining the prices of petroleum while the average price of petroleum will be determined through PSO and Arab Gulf Pellets.

The letter from the Ministry of Energy said that any fluctuation that occurs in the exchange rate within the next 15 days would be reflected in the price. Also, PSO would be signing a long-term agreement to purchase petrol, just as they did for diesel. The purpose of this long-term petrol deal is to obtain fuel at a cheaper rate.

The new method of determining prices is very likely to result in more frequent price hikes and drops owing to various reasons such as fuel shortage, exchange rate fluctuation, etc. However, we are yet to see what impact this move would have on the general public.

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