KARACHI: The government has sought input from the oil sector on proposed revisions to the country’s petroleum pricing methodology.
This has prompted industry stakeholders to urge regulators to adopt a more transparent, cost-reflective pricing framework ahead of the planned implementation of a revised formula for motor gasoline and high-speed diesel from July 1, 2026.
In a formal submission to the Oil and Gas Regulatory Authority (Ogra), the Oil Companies Advisory Council (OCAC) outlined a series of recommendations aimed at strengthening the sustainability of the downstream petroleum sector while ensuring uninterrupted fuel supplies nationwide.
The recommendations were submitted in response to consultations initiated by the Ministry of Energy (Petroleum Division) and Ogra on revisions to the petroleum pricing methodology.The OCAC said that although Pakistan’s petroleum pricing structure has undergone periodic adjustments since 2020, several legitimate industry costs remain outside the current framework.
Among its key proposals, the industry body called for the immediate operationalisation of a digitisation escrow account, which has already received principle-level support from regulators. According to the OCAC, the mechanism will facilitate the recovery of investments already made by oil marketing companies in digital infrastructure and support future modernisation efforts.
The council also recommended an annual automatic review of oil marketing company (OMC) margins, linked to inflation and prevailing operating costs. Industry representatives argue that margin revisions have been infrequent and delayed, despite rising compliance, financing and investment-related costs.
The OCAC further called for the establishment of transparent mechanisms to compensate companies for unavoidable supply chain expenses, including vessel demurrage charges arising from port congestion and scheduling delays.
The organisation also highlighted the growing financial burden linked to outstanding tax-related claims. According to the submission, industry-wide general sales tax (GST) refund claims amounting to approximately Rs86.7 billion remain pending with tax authorities for the period between April 2022 and March 2026. Additional input tax disallowance claims are estimated at around Rs22 billion up to June 2026.
Industry stakeholders have sought the inclusion of financing costs related to these pending claims within the pricing formula. The OCAC stressed the importance of predictable and transparent pricing governance, recommending that any future amendments to the pricing methodology, benchmarks, recovery mechanisms or calculation procedures be undertaken only after consultation with industry stakeholders.
The council also urged regulators to ensure that approved recoveries and compensation adjustments are implemented promptly, rather than being deferred to future pricing periods. Additional recommendations included periodic disclosure of key pricing assumptions and a review of the pricing cycle to better align it with international benchmark averaging practices.
Beyond immediate pricing reforms, the OCAC reiterated its longstanding call for the gradual deregulation of petroleum product prices in Pakistan.The industry body noted that discussions on deregulation have been ongoing since 2022, including the preparation of draft terms of reference and multiple stakeholder consultations. However, a formal implementation framework has yet to emerge.
The OCAC urged Ogra and the Ministry of Energy to develop and publicly communicate a roadmap for phased deregulation, including clear milestones and timelines.According to the council, a transparent, market-based pricing regime would improve industry viability, encourage investment, enhance competition and strengthen supply chain efficiency over the long term.
