Pakistan is preparing to shift towards a market-based pricing system for petrol and diesel, with the federal government expecting the Economic Coordination Committee (ECC) to approve the long-awaited refinery upgrade policy by July 15, Petroleum Minister Ali Pervaiz Malik said on Tuesday.
Speaking at a meeting of the National Assembly Standing Committee on Petroleum, the minister said the proposed policy has already been submitted to the federal cabinet. Once approved, it is expected to accelerate refinery modernization, encourage investment in the downstream petroleum sector, and enable local production of cleaner Euro V-compliant fuels.
Government Plans Market-Based Fuel Pricing
Malik said the government is gradually reducing its direct role in setting petrol and diesel prices and intends to transition towards a competitive market-based pricing mechanism.
He noted that petroleum prices have been announced through a transparent process for nearly two decades, adding that deregulation represents the next phase of reforms aimed at improving efficiency and encouraging private-sector participation in the fuel market.
The minister emphasized that consumers would not be asked to bear the financial burden of outdated refinery operations.
“The government remains committed to protecting the public from the cost of refinery inefficiencies,” he told lawmakers.
Why Fuel Prices Remain High
Responding to concerns about domestic fuel prices, Malik explained that international crude oil prices are only one component of Pakistan’s petroleum pricing structure.
He said Pakistan imports nearly 70 percent of its petrol requirements and approximately 33 percent of its diesel, making domestic prices highly dependent on international supply chains and associated costs.
According to the minister, refining expenses, marine freight charges, insurance costs, and other import-related expenditures continue to keep petroleum products expensive even when global crude oil prices decline.
He added that although crude prices have largely returned to levels seen before recent geopolitical tensions, prices of refined petroleum products have not fallen at the same pace, limiting the scope for price reductions in Pakistan.
Petroleum Levy and Carbon Levy
Malik also clarified that current petroleum levy and carbon levy rates remain below the levels imposed on February 27, but continued pressure from imported fuel costs has offset much of the benefit consumers might otherwise have received.
He said the government is closely monitoring global energy markets while balancing fiscal requirements with efforts to shield consumers from excessive price volatility.
Lawmakers Raise LPG and CSR Concerns
The parliamentary committee also discussed concerns regarding the implementation of official Liquefied Petroleum Gas (LPG) pricing across the country.
Lawmakers questioned petroleum companies over the utilization of billions of rupees allocated under corporate social responsibility (CSR) programmes, particularly in Sindh and Balochistan.
The committee directed the Petroleum Division to submit a detailed report explaining how the unspent CSR funds have been used and whether the allocated resources have benefited local communities.
Refinery Policy Expected to Reshape Energy Sector
Industry observers believe approval of the refinery upgrade policy could mark one of Pakistan’s most significant energy sector reforms in recent years. The policy is expected to encourage refinery investment, improve fuel quality, reduce reliance on imported refined products, and support the country’s long-term transition to cleaner fuel standards.
The expected move toward fuel price deregulation also reflects the government’s broader strategy to liberalize the petroleum market while promoting greater competition and operational efficiency across the energy sector.
