Pakistan’s oil industry has strongly protested the government’s latest move on fuel pricing. The prime minister announced a record 18 to 20 percent cut in petroleum prices last week, and industry officials are calling it unilateral, inconsistent with the approved pricing mechanism, and financially damaging.

The result has been a significant petrol price cut loss for refineries and oil marketing companies. Industry officials estimate the hit at around Rs. 105 billion. Therefore, several companies could now face serious financial distress, or even bankruptcy, in the months ahead.

An industry executive explained just how often the pricing method has shifted recently. The federal cabinet approved the pricing mechanism four times in less than three months. However, the method kept changing to the sector’s disadvantage during an already difficult period.

According to the executive, the government initially used a 15-day average while prices were rising. It then shifted to a weekly average as import premiums and war risk surcharges increased. Later, it moved to crude-based pricing instead of product import pricing.

In this latest decision, the government used three-month average premiums. Interestingly, this happened even though the actual benchmark of Pakistan State Oil was not available. He added that this occurred despite petroleum imports being reviewed and approved by the National Coordination and Management Council, a recently established civil-military forum overseeing energy supplies and pricing.

The numbers tell a striking story. Diesel’s ex-refinery price should have fallen by Rs. 30 per litre on June 19 under the prevailing formula. Instead, the cabinet cut it by Rs. 81 per litre through a decision taken by circulation, without any debate.

PSO alone expects losses of around Rs. 50 billion from this adjustment. Meanwhile, Pak-Arab Refinery Company could face losses of about Rs. 25 billion. Other companies will collectively absorb another Rs. 30 billion in losses.

The Oil Companies Advisory Council, representing more than three dozen refineries and OMCs, has written formally to the government to protest the decision. The council also requested an urgent meeting with chief executives this Monday or Tuesday. However, official sources say the government has not accepted that request this week.

In its letter, the council raised grave concern over what it called continued unilateral pricing interventions. It said these decisions are increasingly threatening the viability of Pakistan’s downstream petroleum sector. Additionally, the council noted that it had repeatedly warned about the consequences of abrupt pricing changes, yet consultation with stakeholders remained minimal.

Based on industry stocks of around 505,000 tonnes of petrol and 655,000 tonnes of high-speed diesel, the council calculated the petrol price cut loss at roughly Rs. 104 billion across refineries and OMCs. It stressed that these losses hit working capital, liquidity, and shareholder value directly. Furthermore, the council emphasized that this damage stems from policy action, not from inefficiency or market competition.

The council maintained that the industry has continued supporting the government’s energy security goals despite mounting pressure. Still, it warned that the sector’s history of attracting major foreign investment in storage, logistics, and retail development now faces a serious threat from declining investor confidence.

According to the council, these investments depended on regulatory consistency. So repeated abrupt interventions could trigger investor exits, insolvencies, and possible bankruptcies among weaker players in the sector.

The industry also highlighted its own contributions during this period. OMCs have maintained nationwide distribution and strategic inventories despite severe working capital pressures. Refineries, meanwhile, capped HSD margins, maintained pre-war kerosene pricing for the armed forces, supplied jet fuel for Haj flights at pre-war rates, and contributed more than Rs. 7 billion to reduce the price differential claim.

The council described these as shared sacrifices made in the national interest. Finally, it cautioned that continued policy shocks could weaken the sector even further, just as it tries to maintain stability during a turbulent stretch for Pakistan’s energy market.