Oil Companies Warn of Losses as Fuel Price Formula Changes Continue

The differences between the government and the oil industry over the method of determining petrol and diesel prices in Pakistan have once again come to the fore. In a recent meeting, oil marketing companies and refineries expressed serious reservations over the frequently changing pricing formula, while the government has indicated it will continue the current weekly system.

In a meeting convened by the Petroleum Division of the Ministry of Energy, Federal Minister for Petroleum Ali Pervez Malik and Secretary Petroleum Hamid Yaqoob Sheikh assured industry representatives that future prices will be determined on a more realistic basis.

According to government officials, future petrol prices will be determined according to the premium of the latest import cargo of Pakistan State Oil, while import costs will also be given primary importance in diesel prices.

However, oil industry representatives took the position that continuous policy changes have made business planning extremely difficult. He said that several changes were made in the pricing principles in the last few months, which caused financial losses to the companies.

Chairman of the Oil Companies Advisory Council Asif Iqbal said in the meeting that if the pricing system continues to change frequently, the confidence of domestic and foreign investors may be further affected. He warned that it will be difficult to expect new investments in the current environment.

The refinery sector also expressed its concerns. According to the representatives, the illegal sale of smuggled diesel is not only harming legitimate businesses but is also affecting the financial performance of refineries. They said that the government should take strict measures against smuggling.

Representatives of some international companies told the meeting that their companies have faced huge financial losses as a result of the recent price changes. According to them, investors are raising questions about the stability of the business environment in Pakistan.

Another important issue in the meeting was the delay in paying price difference claims by OGRA. Industry representatives have argued that the billions of rupees of outstanding dues are affecting the cash flow and day-to-day business activities of companies.

The government, while acknowledging these concerns, said that a committee set up by the prime minister is conducting a detailed review of the petroleum pricing system. The federal minister clarified that complete deregulation is a long process and can be implemented in phases.

According to analysts, the government aims to maintain price stability, while the industry favours a more independent and market-based pricing system. This difference will continue to be a major issue in future energy sector policymaking.

For now, the government has made it clear that the weekly pricing system will continue, but the industry’s suggestions will not be ignored. Consultations in the coming months will determine the direction in which the fuel pricing system in Pakistan moves forward.