A fresh dispute has emerged between Pakistan’s oil industry and the federal government over the recent reduction in petroleum prices, with refineries and oil marketing companies warning that the decision could cost the industry more than Rs105 billion.
The dispute centres on how fuel prices were calculated and whether the latest reduction reflects the market realities faced by companies holding large fuel inventories. Industry representatives say the government has altered the pricing formula used to determine petrol and diesel prices, resulting in a much larger-than-expected reduction.
According to officials familiar with the matter, petroleum companies had been importing and storing fuel based on current market benchmarks. However, the latest pricing decision significantly reduced the value of those inventories, causing significant financial losses for the sector.
The Oil Companies Advisory Council (OCAC), which represents dozens of refineries and OMCs, has formally protested the move and requested talks with government officials. The council argues that pricing decisions are being made hastily without proper consultation with stakeholders responsible for maintaining fuel supplies across the country.
Industry estimates suggest that petroleum stocks currently held by companies include millions of tonnes of petrol and high-speed diesel. With prices falling sharply, the value of these inventories has declined significantly, affecting companies’ balance sheets and operational cash flows.
Oil sector representatives say the problem goes beyond immediate financial losses. They warn that frequent changes in pricing mechanisms make it difficult for businesses to plan investments and manage risk in a sector that requires large capital commitments.
The industry has also raised concerns about investor confidence. According to industry officials, petroleum companies have invested heavily in fuel storage facilities, transportation systems, retail outlets, and supply chain infrastructure. They argue that policy continuity is essential to encourage further investment and maintain a competitive market.
Some industry executives have warned that financially weak companies could face serious difficulties if large inventory losses continue. They say this could reduce competition in the petroleum market and put additional pressure on the sector.
At the same time, industry representatives emphasize that they have continued to support national energy needs despite growing financial challenges. They point to efforts aimed at maintaining strategic fuel reserves and ensuring uninterrupted supply during regional uncertainty.
The dispute comes at a time when the government is trying to provide relief to consumers by reducing fuel prices amid broader economic pressures. While consumers generally welcome lower petrol and diesel prices, industry stakeholders say pricing decisions should also take into account the financial stability of companies operating in the supply chain.
With both sides holding strong positions, the coming weeks could determine whether the government and the petroleum industry can reach a consensus on a pricing framework that balances consumer relief with long-term energy sector stability.