By SKM
December 8, 2025
ISLAMABAD: The Economic Coordination Committee (ECC), meeting tomorrow (Tuesday), is poised to consider proposals that could significantly raise fuel prices for Pakistani consumers, with the government weighing an increase in margins for Oil Marketing Companies (OMCs) and petroleum dealers of up to Rs 1.79 per litre.
The proposals are anchored in a new Consumer Price Index (CPI)-based mechanism, designed to replace the longstanding cost-plus formula. If approved, the revised margins will be directly reflected in petrol and diesel prices, potentially adding a substantial burden on household budgets already strained by inflation.
The ECC’s agenda is packed with critical items. Alongside fuel margins, the committee is expected to approve a new electricity purchase agreement with Iran, the Circular Debt Management Plan for FY2025–26, and a technical supplementary grant of Rs 1.28 billion for the Pakistan Digital Authority. Other key matters include a proposal to ban chloroform imports, a Commerce Division summary on the Gift Scheme, a Rs 5 billion grant for housing subsidies, the dissolution of PASSCO, a special vehicle for the Wheat Stock Management Company, and a budget release for the PIA Holding Company.
Turning to petroleum, the most consequential proposal—Option II—advocates raising OMC margins by Rs 1.63 per litre and dealer margins by Rs 1.79 per litre. The increase is based on CPI inflation for FY2023–24 and FY2024–25, with a 5–15% adjustment band. Officials warn that its approval could trigger a sharp uptick in pump prices, compounding financial pressure on ordinary consumers.
Alternative options have also been tabled. Option I, preferred by the Petroleum Division, calls for a smaller increase of Rs 1.22 per litre for OMCs and Rs 1.34 for dealers. Option III suggests the most conservative hike—Rs 1.05 for OMCs and Rs 1.15 for dealers. The Finance Division has raised no objection to any of the proposals, clearing the way for a decision, though the final scale remains under deliberation.
The move toward CPI-linked margins follows a September 2023 ECC directive, tasking the Oil and Gas Regulatory Authority (OGRA) with developing a systematic formula for margin revisions based on PSO’s operational costs. Since then, industry bodies have pushed for far larger hikes: the Oil Companies Advisory Council (OCAC) demanded a Rs 2.13 per litre increase, while the Oil Marketing Association of Pakistan (OMAP) sought a Rs 8.13 jump. The current CPI-based proposals reflect a calibrated compromise after extensive consultations between Petroleum, Finance, and OGRA officials.
Authorities note that the ECC’s decision will not only shape immediate fuel pricing but also establish a framework for annual CPI-based adjustments, effective from September 1 each year. For consumers, particularly under the higher-end proposal, the change could translate into a price rise of up to Rs 3.50 per litre, reinforcing the ripple effect of inflation on daily life. Ends
