Pakistan’s oil marketing companies (OMCs) and refineries have raised concerns over repeated changes to fuel pricing mechanisms, warning that the policy shifts are reducing profitability, creating liquidity challenges, and discouraging foreign investment in the sector.
The concerns were discussed during a meeting chaired by Petroleum Minister Ali Pervaiz Malik and Petroleum Secretary Hamed Yaqoob Shaikh. Industry representatives urged the government to provide a more stable pricing framework, arguing that frequent revisions have created uncertainty and weakened business confidence.
Officials informed participants that upcoming fuel price reviews would reflect actual import costs. Petrol prices are expected to be linked to a premium of approximately $15.85 per barrel based on the latest cargo imported by Pakistan State Oil (PSO), while diesel prices will continue to be benchmarked against PSO imports from Kuwait Petroleum Corporation at a premium of around $5 to $6 per barrel.
The meeting was convened following strong objections from industry stakeholders over recent modifications to the pricing formula. Executives stated that repeated changes have made financial planning difficult and significantly affected earnings.
Wafi Energy Pakistan CEO Zubair Shaikh said a recent pricing adjustment resulted in losses that exceeded the company’s profits generated over the previous year. He cautioned that continued instability could force foreign investors to reconsider their presence in Pakistan’s energy sector.
Oil Companies Advisory Council (OCAC) Chairman Asif Iqbal noted that diesel pricing mechanisms had been revised seven times and petrol pricing four times within the last three months. He said the latest changes had erased profits accumulated over the past year and warned that policy uncertainty could deter future investment.
Refinery representatives also expressed concerns about the growing availability of smuggled high-speed diesel, which they said is negatively affecting legitimate businesses. They called for stronger action against illegal fuel trade and advocated for a gradual move toward full deregulation of petroleum pricing.
Industry participants further highlighted liquidity pressures caused by delayed payments of more than Rs. 66 billion in price differential claims. They also pointed to rising foreign exchange costs charged by commercial banks, which have added to financial burdens.
Most representatives urged the government to restore the pricing formula that existed before recent conflict-related disruptions, arguing that the current mechanism threatens profitability and working capital across the sector.
Refinery operators additionally objected to the government’s proposal to withdraw a 2.5% deemed duty that had previously been allocated for refinery upgrade projects, despite upgrade agreements not yet being finalized.
In response, Petroleum Minister Ali Pervaiz Malik assured stakeholders that the current seven-day pricing mechanism would remain in place for now. He said a committee established by Prime Minister Shehbaz Sharif would review petroleum pricing policies and consult industry representatives before making future decisions.
The minister added that any move toward complete deregulation would be implemented gradually rather than abruptly, with the possibility of transitioning from weekly to daily price adjustments in the future.
Officials also encouraged industry representatives to engage more actively in policy discussions and public communication to better present the sector’s economic concerns and challenges.
