The committee meeting, chaired by Syed Mustafa Mehmood, was held at Parliament House in Islamabad on Wednesday. The committee was briefed on the mechanism for determining petrol and gas prices and the performance of Pakistan State Oil (PSO) and Oil and Gas Development Company Limited (OGDCL).
Officials informed the committee that the international petroleum market was facing an unprecedented crisis involving crude oil, refined petroleum products, shipping, insurance and refining capacity.
The Petroleum Division said higher shipping and insurance costs, longer transportation routes and exceptionally high crack spreads had significantly increased the international cost of petroleum products.
Petroleum Minister said the government was taking all possible measures to ensure uninterrupted fuel supplies and reduce the impact of the international price shock on domestic consumers.
The Oil and Gas Regulatory Authority (OGRA) told the committee that the existing pricing mechanism was based on a transparent formula available on its website. The basic price of petrol and diesel is calculated using a seven-day rolling average of international prices, along with the applicable exchange rate and other prescribed components.
The committee stressed the need for greater clarity regarding taxes, levies, transportation costs and international price benchmarks that contribute to petroleum prices.
The committee also reviewed the status of refinery upgrades. The Petroleum Division informed members that four of the country's five refineries had signed agreements for upgradation, while negotiations with the remaining refinery were ongoing.
The government is coordinating with refineries to increase domestic production and reduce reliance on imported refined petroleum products. The committee also raised concerns over the production of higher-sulphur petroleum products and their possible environmental impact during the upcoming smog and winter seasons.
On petroleum smuggling, officials said border controls were being strengthened to curb illicit trade. The Petroleum Division said end-to-end digitization of the petroleum supply chain would help identify discrepancies between quantities entering the system and those sold.
The committee also discussed gas pricing, revenue requirements and the circular debt of SNGPL and SSGC. OGRA explained the difference between prescribed prices, consumer prices and revenue requirements and said outstanding amounts of the two gas companies required reconciliation.
The committee directed officials to provide updated figures on the liabilities and revenue shortfalls of SNGPL and SSGC at its next meeting.
The committee also decided to discuss Universal Gas Distribution Company (UGDC) and the commercial sale of gas under the new policy as a special agenda item at its next meeting.
It directed that a UGDC representative be invited to brief members on the company's approval, gas procurement and sale mechanism, customers, pricing, transportation arrangements, use of SNGPL and SSGCL infrastructure and regulatory requirements.
The committee further discussed the possibility of providing relatively cheaper fuel to farmers through Light Diesel Oil (LDO). The Petroleum Division was directed to conduct research on the proposal, including its potential agricultural benefits and safeguards against misuse, diversion and revenue leakage.
The committee was also briefed on the petroleum levy. Officials clarified that the levy is treated as non-tax revenue and is separate from customs duty and other taxes, although it remains a significant component of petroleum prices.
The committee noted that the levy, which was initially intended to absorb fluctuations in petroleum prices, had subsequently become a regular source of government revenue. The chairman stressed the need for greater clarity on the basis and impact of the levy on consumers.
The committee also discussed gas connections for communities living within a five-kilometre radius of oil and gas wells. The Petroleum Division said Rs1 billion had been allocated for the current year, with 70% proposed for SSGC and 30% for SNGPL for phased execution of schemes.
The committee recommended that the issue be discussed at its next meeting and sought details of previous decisions, implementation progress and utilisation of the allocated funds.
The committee also deferred consideration of the Natural Gas (Development Surcharge) (Amendment) Bill, 2026 and the Gas Infrastructure Development Cess (Amendment) Bill, 2026 until its next meeting.
