Oil Industry Raises Concerns Over Proposed Diesel Price Reduction
The Oil Companies Advisory Council (OCAC) has expressed concerns over a proposed change to the high-speed diesel (HSD) pricing formula, saying it could place additional pressure on refinery operations and affect planned investments in Pakistan’s oil sector.
In a letter sent to Energy Minister Ali Pervaiz Malik on September 8, the council said the government was considering reducing the HSD crack ceiling from US$41.89 per barrel to US$30 per barrel.
According to the OCAC, the proposed change could lower the retail price of high-speed diesel by approximately Rs. 18 to Rs. 20 per litre.
Industry Seeks Stable Pricing Policy
The council noted that the HSD pricing mechanism has already undergone several changes in recent months, including a revision introduced on August 20, 2026.
It urged the government to maintain a consistent and predictable fuel pricing framework, saying frequent changes could create challenges for businesses operating in the downstream oil sector.
The OCAC also raised concerns about the difference between the pricing formula and current market premiums. It said the Aramco premium for October was around minus US$2 per barrel, while cargoes were reportedly being offered and booked at premiums ranging from US$15 to US$20 per barrel.
The council warned that a significant reduction in the HSD price could make it more difficult for local refineries to secure October cargoes at prevailing market premiums.
Potential Impact on Refinery Operations
According to the OCAC, expensive cargoes could become less commercially viable under the proposed pricing structure. As a result, refineries could potentially reduce their operating rates instead of increasing production to meet seasonal demand.
The council said the refining industry had continued supporting the government during challenging periods but argued that it could not continue absorbing the financial impact of repeated policy changes.
Billions of Dollars in Refinery Investments
The OCAC also highlighted planned investments in the country’s refining sector.
Refineries are preparing to invest an estimated US$5 billion to US$6 billion in upgrading projects under the Brownfield Refining Policy. The council said a stable pricing mechanism would be important for supporting these long-term investments.
OCAC Seeks Higher OMC Margins
The council also called attention to the pending revision in oil marketing company (OMC) margins.
It said OMC margins were last revised in September 2023, while operating, compliance and regulatory costs have increased since then.
The OCAC has requested the government to immediately notify and implement the pending Rs. 1.22 per litre increase in OMC margins.
The council has urged the government to maintain consistency in the fuel pricing mechanism, saying a predictable policy framework would help support the long-term stability and investment plans of Pakistan’s downstream oil industry.
