By Staff Reporter
ISLAMABAD: Pakistan’s government has barred private oil marketing companies from importing high-speed diesel, handing state-run Pakistan State Oil exclusive control over the fuel’s supply for the current fiscal year, according to the Dawn newspaper.
The move, part of a broader set of federal cabinet decisions, also caps the volume of petrol that private companies can bring into the country, tying their import allocations to historical sales performance, Dawn reported Tuesday. The measures stem from a request by the Petroleum Division that cited prevailing market conditions and a need to shield consumers from rising fuel prices.
The cabinet’s guidelines direct Pakistan State Oil to pursue a long-term supply agreement with Oman’s OQ Trading for petrol imports, a step officials linked to concerns over supply security following the closure of the Strait of Hormuz. The arrangement would mirror an existing diesel supply contract between the state oil company and Kuwait Petroleum Company.
The Oil & Gas Regulatory Authority has received the new policy framework, which restricts diesel imports to Pakistan State Oil for the 2027 fiscal year while easing a revised pricing mechanism into place, the guidelines showed.
Private companies seeking to import petrol will need Ogra’s approval, granted through the regulator’s existing monthly product review meetings and calculated according to each company’s market share in prior months. Import shipments must total at least 10,000 tons.
Companies that default on petrol import commitments, delay deliveries beyond an agreed month, or fail to meet upliftment obligations from refineries face a nine-month suspension from receiving further import allocations, according to the guidelines.
Other pricing components — including exchange rate adjustments, refinery regulatory duty, octane and sulphur penalties, and inland freight equalization margin settlements — will remain unchanged under existing practice, the cabinet said.
Pricing Mechanism
For both petrol and diesel, the free-on-board import price will be calculated using a seven-working-day rolling average of Platts Arab Gulf assessments for the relevant grades — 92 RON petrol and 10 parts-per-million sulphur diesel. Ogra will announce prices daily, with rates held steady over weekends.
Pakistan State Oil’s own import costs will serve as the benchmark for calculating premiums, incidental charges and customs duties on both fuels. The weighted average of the company’s actual costs on imported cargoes will apply within the seven-day rolling window. If Pakistan State Oil imports no petrol during that period, the calendar year-to-date average of those costs will be used instead.
Should the company finalize a long-term supply arrangement with a foreign supplier such as OQ Trading, the premium under that contract would determine petrol prices whenever no imports occur within the preceding seven working days — a system already applied to diesel through the Kuwait Petroleum Company arrangement.
When Pakistan State Oil imports no diesel during the trailing seven-day period, the Kuwait contract’s premium will apply, while incidental costs and customs duties will be drawn from the calendar year-to-date average.
Regulatory Authority Restored
The guidelines direct Ogra to calculate and publish ex-depot petroleum prices daily on its official website without requiring approval from the federal government or prime minister, notifying the Director General of Oil after each publication.
Ogra already performs this calculation and reports it to the oil office, but the regulator stopped publishing prices on its website more than a decade ago after the government took over price-setting for political reasons. No legal requirement currently obligates the prime minister to approve petroleum prices.
The cabinet’s instructions also cap the petroleum levy at a rate the cabinet itself sets as an upper limit, with the Finance Division to advise the Petroleum Division of the applicable rate for the fiscal year within that ceiling for formal notification.
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