Pakistan’s oil-marketing companies and refineries have warned the government that fuel price change decisions are causing severe damage. Repeated adjustments to fuel pricing rules are straining working capital and risking foreign investment across the sector.
Officials held a meeting with industry executives to address the crisis. Petroleum Minister Ali Pervaiz Malik and Petroleum Secretary Hamed Yaqoob Shaikh sought to reassure executives that upcoming adjustments would reflect actual import premiums. Additionally, they promised no further immediate changes to the current weekly pricing mechanism.
According to officials, the next review would set gasoline prices at a premium of roughly $15.85 per barrel. State-run Pakistan State Oil had imported the latest cargo at this premium level. Meanwhile, officials would continue benchmarking diesel prices against PSO’s imports from Kuwait Petroleum at a premium of about $5 to $6 per barrel.
Officials convened the meeting after the latest fuel price change adjustments triggered strong objections from the industry. Therefore, executives had come prepared to voice their frustrations directly. They argued that frequent revisions had made the business environment unpredictable and undermined earnings significantly.
Wafi Energy Pakistan Ltd. Chief Executive Officer Zubair Shaikh shared a shocking statistic. His UAE-based shareholders found it stunning that one fuel price change had caused losses exceeding the profits they had earned over more than a year. He cautioned that major foreign investors could consider leaving the market entirely.
Asif Iqbal, chairman of the Oil Companies Advisory Council, provided more details on the extent of changes. He said officials had revised diesel pricing seven times and gasoline pricing four times over the past three months. Moreover, the latest revision had eliminated profits the sector had accumulated over the past year in a single day.
Iqbal warned that such volatility would deter foreign investment in the energy sector. So the problem extends well beyond immediate profitability concerns. Executives from both oil-marketing companies and refineries echoed those concerns throughout the meeting.
Cynergico Petroleum Plc’s Amir Abbassciy noted that widespread smuggled high-speed diesel was hurting refineries. He called for full deregulation of pricing and stronger enforcement against illegal fuel trade. Additionally, he argued that these measures could stabilize the market better than frequent official adjustments.
Another executive raised a critical liquidity issue during the meeting. The Oil and Gas Regulatory Authority was withholding more than Rs. 66 billion in price differential claims. These claims stemmed from government policy decisions, creating severe liquidity pressure. Furthermore, banks were charging higher foreign-exchange costs than the State Bank benchmark, compounding the problem.
Most industry representatives urged the government to restore the formula that officials had used before recent conflict-related disruptions. They said it had delivered more stability than the current approach. Finally, they warned that the current method could eliminate sector profitability entirely.
Refinery executives also objected to the government’s move to seek surrender of 2.5 percent deemed duty. The government had earmarked this duty for plant upgrades. So the move threatened long-term capacity improvements across the industry.
Minister Malik told executives that the seven-day pricing mechanism would stay in place for now. He said Prime Minister Shehbaz Sharif had formed a committee to review petroleum pricing. Additionally, officials would include industry input in future consultations. However, he cautioned that the government could not introduce full deregulation abruptly and would require gradual transition instead.
