Summary Petroleum Minister Ali Pervaiz Malik said the IMF is unlikely to agree to reducing the petroleum levy unless Pakistan identifies an alternative source of revenue.
ISLAMABAD (Dunya News) - Petroleum Minister Ali Pervaiz Malik said on Thursday that the International Monetary Fund (IMF) was unlikely to approve any reduction in the petroleum levy unless the government identified an alternative source of revenue.
Speaking at a meeting of the National Assembly's Standing Committee on Petroleum, chaired by Umar Farooq, the minister said the current levy on petrol remained lower than the level imposed during the war period. However, he acknowledged that reducing it without compensatory measures would not be acceptable to the IMF.
Malik said the government had transferred the authority to determine petroleum product prices to the Oil and Gas Regulatory Authority (OGRA), adding that the pricing mechanism was publicly available on the regulator's website and would also be published in Urdu to enhance transparency.
He explained that petrol and diesel prices are now calculated daily using a seven-day rolling average of international refined fuel prices. The final consumer price also includes applicable taxes and margins for oil marketing companies and other stakeholders.
The minister said the new mechanism was introduced to discourage speculative behaviour that had emerged under the previous weekly pricing system, when suppliers would sometimes reduce fuel availability in anticipation of price revisions.
During the meeting, Senator Saifullah Abro criticised the daily pricing model, describing it as a "slow poison" for consumers. He argued that frequent price changes created uncertainty for the public, making it difficult for people to plan their daily expenses.
Responding to questions about the vacant post of OGRA chairman, Malik said the recruitment process had been initiated on time, but no suitable candidate was selected after interviews. He added that the appointment process had now been restarted.
An acting OGRA official told the committee that changes in international oil prices are reflected in Pakistan through the seven-day averaging formula. The official said if global prices fall, domestic prices would decline after the averaging period, while increases in international prices would similarly be passed on over seven days.
The official added that the current customs duty on petrol stands at Rs18.11 per litre and maintained that the daily pricing mechanism benefits consumers by smoothing price fluctuations and reducing opportunities for short-term profiteering.
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Questioning recent fuel price adjustments, Senator Abro pointed out that international crude oil prices had risen from around $76 per barrel on July 11 to $82 per barrel on July 17, asking how domestic petrol prices had increased by nearly Rs30 per litre.
The petroleum minister replied that domestic pricing is based on the international prices of refined petroleum products, rather than crude oil alone.
