Lead
The Pakistani government may shift back to fuel conservation and austerity measures as early as this week or next, as renewed hostilities in the Middle East put pressure on oil prices and foreign exchange reserves, Dawn reported. The move comes alongside changes to petroleum pricing that will see petrol and diesel prices revised on working days only, with the government retaining control over key tariffs and margins.
Coverage Comparison
Dawn, Pakistan's leading English-language daily, provided the most detailed reporting on the matter across two articles. The first article, published after a briefing with a senior government official, focused on the potential policy shift and the procedural changes to fuel pricing. The second article, citing informed sources, highlighted the precarious state of petrol stocks and the government's urgent response to prevent hoarding. Both articles underscore the pressure on Pakistan's economy from rising global oil prices and the need to preserve foreign exchange reserves.
The first Dawn report detailed the government's contingency plans to reactivate fuel conservation measures, which had been in place in recent months. It also explained the mechanics of the new daily pricing system, clarifying that prices would now be announced every working day (Monday to Friday) instead of weekly, effectively keeping Friday's prices in place through the weekend and Monday. The report quoted a senior government official who indicated that price revisions could further decrease to four days a week once conservation measures are formally adopted. The official also noted that Prime Minister Shehbaz Sharif had already discussed these measures and that the matter might be taken up by the federal cabinet this week for formal approval.
The second Dawn article painted a more urgent picture, describing oil supply chain players as "nervous" after petrol stocks declined to a 14-day cover. The report noted that the government had convened an urgent session of the National Coordination and Management Council (NCMC), a civil-military body overseeing energy supplies, to review the availability of petroleum products. It also highlighted rising prices — petrol and diesel were estimated to be costlier by around Rs10-12 and Rs40-42 per litre, respectively — which were providing an incentive for dealers to seek greater supplies and for hoarders to profit.
Key Claims
Possible Return to Fuel Conservation Measures
The government may revert to fuel conservation and austerity measures as early as this week or next, Dawn reported, citing a senior government official and informed sources. This would be a response to renewed hostilities in the Middle East, which have raised pressure on oil prices and foreign exchange reserves. The official stated that Prime Minister Shehbaz Sharif had discussed the measures over the past week and that the federal cabinet might take a formal decision this week.
Daily Price Revisions on Working Days
Petrol and diesel prices will now be revised daily, but only on working days (Monday to Friday), Dawn reported. This change was described as a step towards deregulation and daily pricing, though the government retains control over the pricing mechanism. An official explained that the price announced on Friday would remain effective through Sunday, and that revisions could decline to four days a week once conservation measures are implemented.
Ogra's Role and Government Control Over Tariffs
The Oil and Gas Regulatory Authority (Ogra) will continue to calculate price changes and send working papers to the Petroleum Division, which will issue notifications and press notes, Dawn reported. The government will retain control over the levy, climate levy, customs duty, deemed duty, and margins. Taxes and margins imposed by the government stand at around Rs110 per litre on petrol and Rs96 per litre on diesel, according to the report.
Declining Petrol Stocks and Hoarding Concerns
Petrol stocks declined to a 14-day cover, while diesel stocks stood at a cover of around 21 days, Dawn reported. Although local refining is keeping pace with requirements, the report warned that oil companies have pending price differential claims against the government. The NCMC, chaired by Minister for Economic Affairs Ahad Khan Cheema, with Lt Gen Zafar Iqbal as co-chairman of its executive committee, reviewed the availability of petroleum products and discussed activating enforcement mechanisms to discourage hoarding.
Rising Prices and Consumption Patterns
The second Dawn report noted that petrol consumption had risen over the past three weeks following a substantial price cut. In the first half of July, petrol consumption was almost 18-20 per cent higher year-on-year, while diesel demand was about 40 per cent higher than in July over the past five years, indicating a reduction in smuggled inflows from Iran due to a narrower price gap. Additionally, the cancellation of some Pakistan State Oil (PSO) import cargoes, which failed to secure NCMC clearance amid falling global prices before the interim US-Iran peace agreement, contributed to the stock decline. Subsequent tensions sent import premiums soaring, with PSO's two latest petrol cargoes attracting around $25 per barrel in premiums, compared to $12 about 10 days earlier.
Perspectives
Government Perspective
The government official, speaking to Dawn, framed the measures as necessary to maintain at least three months of import cover and to respond to regional instability. The official emphasized that the pricing changes were procedural and not a shift in the fundamental mechanism, and that Ogra would continue to calculate prices daily as a routine.
Industry and Market Perspective
Informed sources within the oil supply chain expressed nervousness over the declining petrol stocks and rising prices, which were creating incentives for hoarding. The NCMC's urgent review was seen as a response to these concerns, and the government's activation of enforcement mechanisms was aimed at discouraging profiteering.