KARACHI: Pakistan State Oil (PSO) has raised alarm over what it described as “extraordinary and unplanned” allocations of high-speed diesel (HSD), warning that the practice is severely disrupting its supply chain planning and exposing the market to risks.
In a letter to the Oil and Gas Regulatory Authority (Ogra), the state-owned oil marketing company said it would not accept volumes beyond its regular October allocation, accusing refineries and oil marketing companies (OMCs) of creating distortions by failing to lift their commitments and producing more than declared levels.
PSO said it was “utterly surprised” by last-minute revisions that inflated its October allocation from the 126,000 tonnes agreed at the August 19 product review meeting (PRM) to 174,000 tonnes by September 17—nearly 45 percent higher than the usual trend. Such abrupt increases, it added, undermine planning, financing, and storage management.
The company noted that refineries had produced 88,000 tonnes above their declared volumes between June and September, and raised October output by another 48,000 tonnes beyond earlier projections. Meanwhile, many OMCs failed to meet their PRM obligations, short-lifting 78,000 tonnes during June–August and keeping mandatory 20-day stock cover well below regulatory requirements.
“This exposes the entire industry to supply chain shocks in case of sudden demand surges, as witnessed in late 2024. Non-compliance by some players creates undue pressure on compliant OMCs and inflates financing costs,” PSO cautioned.
The company also objected to an OMC that failed to lift 21,000 tonnes over three months but was still allowed to import 38,000 tonnes in October instead of first meeting its refinery obligations.
PSO urged Ogra to strictly enforce PRM allocations, compel OMCs to lift declared refinery volumes, and ensure refineries adhere to their declared production to safeguard industry stability.
Story by Tanveer Malik
