KARACHI: The government and petroleum industry stakeholders have agreed that the fundamental petroleum pricing formula should not be changed frequently, amid growing concerns over financial losses being faced by the downstream oil sector.
Federal Minister for Petroleum Ali Pervaiz Malik chaired a meeting with representatives of the oil industry to deliberate on the oil pricing formula. The meeting was held following a letter from the Oil Companies Advisory Council (OCAC), which represents oil refineries and oil marketing companies (OMCs), urging the minister to intervene in what it described as an “imminent collapse” of the downstream petroleum sector due to unilateral pricing decisions and mounting financial pressures.
According to the OCAC, the latest reduction in petroleum prices under a revised pricing mechanism has exposed the industry to losses estimated at around Rs104 billion. The council said these losses were associated with existing inventories of approximately 505,000 metric tonnes of motor spirit (petrol) and 655,000 metric tonnes of high-speed diesel held by companies. issue was the reduction of deemed duty from 7.5pc to 5pc and its partial shift into IFEM, which industry representatives said would increase financial pressure.
