Pakistan’s government is preparing to introduce petroleum sector deregulation in phases, with an initial focus on reducing high-speed diesel (HSD) prices. The recommendations are expected to be presented to Prime Minister Shehbaz Sharif within the next two weeks as part of broader reforms aimed at improving efficiency and providing relief to consumers.
According to officials familiar with the discussions, the government’s Petroleum Pricing Committee has proposed reducing the international crack spread for high-speed diesel from around $70 per barrel to $35–40 per barrel. The move is expected to lower domestic diesel prices while maintaining the financial viability of local oil refineries.
Under the proposed petroleum sector deregulation plan, petrol will be the first product to be gradually deregulated. Other petroleum products will be brought under the new pricing mechanism in subsequent phases as reforms are implemented across the sector.
Officials said the recommendations are also linked to reforms under the IFEM (Inland Freight Equalisation Margin) system. As part of these reforms, the number of petroleum depot points across the country is proposed to be reduced from 22 to 11 to improve operational efficiency and streamline fuel distribution.
Sources said the Petroleum Pricing Committee discussed the proposals during its latest meeting and is expected to finalise its recommendations by next Thursday. The final report will include measures for phased deregulation as well as immediate relief through lower diesel prices.
Government officials believe that reducing the diesel crack spread could benefit transporters, industries, and the agriculture sector by lowering fuel costs. However, the proposed deregulation framework will require careful implementation to ensure market stability and uninterrupted fuel supplies.
The proposed petroleum sector deregulation marks a significant policy shift in Pakistan’s energy market. If approved, the reforms could reshape the country’s fuel pricing system while aiming to balance consumer relief, refinery sustainability, and greater market efficiency.
