Pakistan’s oil industry has strongly criticized the government’s recent 18-20 percent reduction in petroleum prices, claiming the decision has inflicted losses of approximately Rs. 105 billion on oil refineries and oil marketing companies (OMCs).
Industry representatives described the move as unilateral and inconsistent with the approved petroleum pricing framework, warning that the financial impact could push some companies toward insolvency.
According to industry officials, the government has repeatedly altered the fuel pricing mechanism over the past three months. They argue that while prices were rising, authorities relied on a 15-day average calculation, later switching to a weekly average during periods of higher import premiums and war-risk surcharges. The methodology was subsequently changed to crude-based pricing and, most recently, to a three-month average premium formula.
Industry executives contend that under the existing pricing formula, diesel prices should have decreased by around Rs. 30 per litre on June 19. Instead, the federal cabinet approved a much larger reduction of Rs. 81 per litre, significantly increasing financial pressure on the sector.
Officials estimate that Pakistan State Oil (PSO) alone could face losses of nearly Rs. 50 billion, while Pak-Arab Refinery Company (PARCO) may incur losses of around Rs. 25 billion. Other refineries and OMCs are expected to collectively absorb an additional Rs. 30 billion in losses.
The Oil Companies Advisory Council (OCAC), representing more than 30 refineries and OMCs, has formally protested the decision and requested an urgent meeting with government officials. However, industry sources claim that no meeting has been scheduled so far.
In its communication to the government, the council expressed concern over repeated policy interventions in petroleum pricing, stating that abrupt changes are undermining the financial sustainability of Pakistan’s downstream petroleum sector.
Based on existing industry inventories of approximately 505,000 tonnes of petrol and 655,000 tonnes of high-speed diesel, the council estimates that the latest price reduction has resulted in value erosion exceeding Rs. 104 billion.
The industry body warned that these losses directly affect working capital, liquidity, and shareholder value, while also weakening investor confidence in Pakistan’s energy sector.
OCAC further noted that oil companies and refineries have continued to support national energy security efforts by maintaining fuel supplies, strategic inventories, and stable distribution networks despite mounting financial pressures.
The council cautioned that continued policy uncertainty could discourage future investment, increase financial strain on companies, and potentially lead to insolvencies or bankruptcies within the petroleum sector.
