Refineries and marketers tell government repeated revisions are eroding profits, straining liquidity and threatening foreign investment
ISLAMABAD: Pakistan’s oil-marketing companies and refineries have warned the government that repeated changes to fuel pricing rules are undermining profitability, squeezing working capital and creating uncertainty that could drive foreign investors out of the country’s energy sector.
The concerns were raised during a meeting with Petroleum Minister Ali Pervaiz Malik and Petroleum Secretary Hamed Yaqoob Shaikh, who sought to reassure industry executives that upcoming price revisions would better reflect actual import premiums and that no immediate further changes were planned to the current weekly pricing mechanism.
Officials said petrol prices in the next review would be linked to a premium of about $15.85 per barrel based on the latest cargo imported by Pakistan State Oil, while diesel would continue to be benchmarked against PSO’s imports from Kuwait Petroleum Corporation at a premium of roughly $5 to $6 per barrel.
Industry says frequent revisions have wiped out profits and shaken investor confidence
Executives told the government that constant adjustments to the pricing formula had made the business environment unpredictable and had damaged earnings across the sector.
Wafi Energy Pakistan chief executive Zubair Shaikh said one pricing change had caused losses larger than the profits earned over more than a year, warning that major foreign shareholders were alarmed and could reconsider their presence in Pakistan.
Oil Companies Advisory Council chairman Asif Iqbal said diesel pricing had been changed seven times and petrol pricing four times in the last three months. He warned that the latest revision had wiped out profits built up over the past year in a single day and would discourage future investment.
Government promises review as firms demand stable policy and anti-smuggling action
Refineries and oil marketers also raised concerns over smuggled diesel, delayed payments and mounting liquidity pressure. Executives said the Oil and Gas Regulatory Authority was withholding more than Rs66 billion in price differential claims, while higher foreign exchange costs charged by banks were further worsening financial strain.
Industry representatives urged the government to restore the pricing mechanism used before recent conflict-related disruptions and warned that the formula introduced on June 19 could wipe out sector profitability.
In response, Malik said the seven-day pricing mechanism would remain in place for now, while a committee formed by Prime Minister Shehbaz Sharif would review petroleum pricing with input from the industry. He added that full deregulation would not happen abruptly and would instead be introduced gradually, potentially moving from weekly to daily price adjustments.
