Pakistan Fuel Price Deregulation A Step Closer

The Economic Co-ordination Committee (ECC) of the Cabinet has approved de-regulation of oil prices and Inland Freight Equalisation Margin (IFEM). The ECC has also approved to fix margins of oil marketing companies (OMCs) and dealers which will result in reduction of oil prices.

The Economic Co-ordination Committee has also directed Petroleum Ministry to seek ratification of decision from the Cabinet before its implementation. "IFEM will fall in controlled-deregulation because the Oil and Gas Regulatory Authority (Ogra) will notify it from one destination to other destination but so far as prices of petroleum products are concerned, refineries and OMCs will determine the prices on monthly basis whereas Ogra will monitor it," the official said, adding that imported price will be benchmark for prices and refineries as well, as OMCs will not be allowed to charge over set 'bench mark price' to protect consumers interests. He said that in new oil pricing formula, the role of Ogra was more effective.

Oil refineries have been seeking to have the government link price of oil products with 'actual import price' to secure them from loss of Rs 3 to Rs 4 per litre. "Now, the distortion impact in price of petrol between locally produced and imported has been removed after fixing 'actual import price' as bench mark for motor fuels," the official said, adding that due to difference between imported and locally produced motor fuel, OMCs had submitted claims to release money on account of price differential claims. "After new pricing formula, the government will have to face no burden on account of price differential claims on imported motor gasoline," he added.

PETROLWORLD 17/10/2010  Source Business R.