Oil sector criticises govt for deviating from fuel pricing formula

KARACHI: The oil sector has accused the government of deviating from its own approved pricing formula in calculating petroleum product prices effective July 1.

In a letter addressed to the chairperson of the Oil and Gas Regulatory Authority (Ogra), the Oil Companies Advisory Council (OCAC) expressed serious concern over the departure from the official mechanism for fuel pricing.

“To manage consumer prices, the exchange rate adjustment was set to zero; however, this contradicts the established formula,” the industry body said. The OCAC also flagged the discontinuation of a key transparency measure: the sharing of the import cost component letter, which was previously circulated as part of the pricing process. The practice has reportedly not been followed since last year.

“This lack of visibility undermines transparency and creates room for discretionary adjustments without industry insight. We strongly urge that this practice be resumed, and that the relevant documentation be consistently shared alongside pricing notifications,” the letter stated.

The OCAC stressed that deviation from the approved pricing mechanism is unsustainable. “The petroleum industry is already under severe pressure due to rampant smuggling, exemption of sales tax, high turnover tax, inadequate margins, and other challenges. Further distortions in pricing will only exacerbate these issues and threaten supply chain stability,” it said.

The industry body called for an immediate revision of fuel prices in accordance with the approved formula, and urged the government to adhere to this pricing mechanism “in both letter and spirit.” It also demanded recovery of losses incurred due to the deviation.

In the most recent price review, the government raised petrol prices by Rs8.36 per litre and high-speed diesel (HSD) by Rs10.39 per litre. Petrol rose from Rs258.43 to Rs266.79 per litre, while HSD increased from Rs262.59 to Rs272.98 per litre. The new rates took effect on July 1.