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Pakistan has recently taken another step towards market-reflecting petroleum pricing, a process that started in 2002. Pakistan transitioned from weekly (earlier fortnightly) reviews to daily price adjustments managed by the Oil and Gas Regulatory Authority (Ogra). Retail prices for petrol and high-speed diesel (HSD) are now determined using a formula tied to a rolling average of the past seven days’ Platts benchmark rates. Ogra is publishing the updated prices on its website daily.
But is this deregulation? One would argue no, since Ogra still determines the price based on government-set parameters. What has changed is the frequency of price setting, not the fact that the government is setting prices. The petroleum levy remains entirely under state control, used for revenue generation, and adjustable only with the finance ministry’s approval. Diesel imports remain restricted to a single state-owned company, PSO.
Moreover, retaining the inland freight equalisation margin (IFEM) preserves centralised price equalisation, which runs counter to the spirit of deregulation. And the deemed duty, a hidden tariff-protection charge built into the ex-refinery price of locally refined fuel, continues to distort competition between imported and domestic products. In other words, no deregulation in any meaningful sense.
