The Oil Companies Advisory Council (OCAC) has warned that another proposed change to the high-speed diesel (HSD) pricing formula could further hurt refinery operations and threaten planned investments in the sector.
In a September 8 letter to Energy Minister Ali Pervaiz Malik, the OCAC said the government was considering lowering the HSD crack ceiling from US$41.89 per barrel to US$30 per barrel. The move could reduce the HSD price by about Rs. 18 to Rs. 20 per liter, it said.
The council said the change would come after several revisions to the HSD pricing mechanism in recent months, including the latest one introduced on Aug. 20, 2026. It urged the government to keep fuel pricing consistent and predictable.
The OCAC also said the existing HSD pricing formula does not reflect current market premiums. While the Aramco premium for October is minus US$2 per barrel, the council said cargoes are being offered and booked at premiums of US$15 to US$20 per barrel.
It warned that an abrupt reduction in the HSD price could make it difficult for refineries to book October cargoes at prevailing premiums. This could make high premium cargoes uneconomical and force refineries to reduce throughput instead of increasing production ahead of seasonal demand.
The council said the refining industry had continued to support the government during difficult periods but could not repeatedly absorb the financial impact of policy interventions.
It said refineries were also preparing to invest about US$5 billion to US$6 billion in upgrading projects under the Brownfield Refining Policy, making policy consistency and pricing stability important for these investments.
The OCAC also highlighted the pending increase in oil marketing company margins. It said OMC margins were last revised in September 2023 despite continued inflation, rising operating and compliance costs and increased regulatory requirements.
The council again requested the immediate notification and implementation of the pending Rs. 1.22 per liter increase in OMC margins. It urged the government to ensure consistency and continuity in the fuel pricing formula in the interest of the downstream oil industry.
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