KARACHI: The oil industry on Tuesday raised concerns over recent changes to the government’s petroleum product pricing methodology, warning that the revised mechanism could undermine the sustainability of fuel imports and long-term supply security.
In a formal communication addressed to the Ministry of Energy (Petroleum Division) and the Oil and Gas Regulatory Authority (Ogra), the Oil Companies Advisory Council (OCAC) expressed concern over the government’s decision to revise the pricing methodology for petroleum products with effect from June 6, 2026.
According to the OCAC, the revised framework introduces a calendar year-to-date averaging approach for key cost components of motor gasoline (Mogas), including import premiums, customs duties and incidentals. The industry argues that the change departs from the previously established market-linked pricing mechanism and was implemented without prior consultation with stakeholders.
The OCAC noted that petroleum imports are typically contracted several weeks in advance based on prevailing market conditions and approved pricing formulas. Oil marketing companies (OMCs) rely on transparent benchmarks, particularly import premiums established through Pakistan State Oil’s (PSO) imports, when making procurement decisions.
The council said the new averaging methodology disconnects domestic pricing from current import costs, creating uncertainty for companies that have already committed to cargo purchases under different assumptions.
According to industry estimates, the revised methodology has reduced the ex-refinery benchmark price of Mogas by around Rs23.83 per litre compared with the previous week. The OCAC argued that the reduction does not reflect prevailing import costs and could result in substantial unrecovered expenses for importing companies.
Sources in the oil sector said that there can be a serious shortage of Mogas if the status quo remained on the price formula of petrol.The industry body warned that if actual procurement costs cannot be recovered through the pricing formula, importers may become reluctant to commit to future cargoes, potentially affecting fuel availability.
Pakistan currently meets around 70 per cent of its motor gasoline demand through imports, making the continued participation of importing OMCs critical to maintaining national fuel supplies.
The OCAC further cautioned that increased pricing uncertainty could discourage international suppliers and lead to higher risk premiums on future cargoes, potentially offsetting any consumer benefits intended by the revised mechanism.
While acknowledging the government’s objective of reducing short-term fuel price volatility and improving price stability for consumers, the OCAC said such stability should not come at the expense of sustained under-recovery of actual import costs by the industry.
The council urged authorities to review the use of calendar year-to-date averages for Mogas pricing components introduced on June 6 and restore the previously approved market-linked mechanism for determining premiums, duties and incidentals. It also called for any future changes to the pricing methodology to be undertaken in consultation with industry stakeholders.
The OCAC urged regulators to take prompt action to preserve a stable, predictable and sustainable pricing framework that supports import viability, supply security and long-term policy certainty in the petroleum sector.
