Islamabad: A growing policy dispute within Pakistan’s power corridors risks triggering a fuel crisis, as the government reviews the existing oil pricing mechanism amid mounting global supply pressures linked to the Middle East conflict.
Sources revealed that a committee formed by Prime Minister Shehbaz Sharif to reassess the oil pricing formula has faced strong opposition from industry stakeholders. The proposed changes—reportedly aimed at delinking domestic prices from international markets—have been unanimously rejected by oil companies, which warn that such a move could severely disrupt supply chains.
The current pricing system, which adjusts fuel prices weekly in line with global trends, has helped maintain relative stability. However, industry representatives argue that abandoning this model would make it commercially unviable for oil marketing companies to import fuel at higher international rates while selling it domestically at suppressed prices.
Officials, including Petroleum Minister Ali Pervaiz Malik, have so far managed to ensure steady supplies despite regional disruptions. However, the situation remains fragile. Reports of Russia halting global oil shipments from April 1 and supply route challenges involving Iran have heightened concerns. Deputy Prime Minister Ishaq Dar recently confirmed that Iran has permitted 20 oil cargoes to reach Pakistan, offering temporary relief.
According to industry sources, consultations held by the Oil and Gas Regulatory Authority (OGRA) resulted in a clear consensus against the proposed pricing changes. Stakeholders warned that abrupt policy shifts could undermine supply planning, disrupt procurement cycles, and erode investor confidence in an already strained sector.
Industry leaders emphasized that financial sustainability remains a critical concern. Rising global oil prices, currency depreciation, and unresolved issues such as input sales tax recovery and exchange loss compensation have increased working capital pressures on oil marketing companies and refineries.
They further cautioned that poorly aligned pricing policies could paradoxically raise domestic fuel costs even when international prices decline, placing an additional burden on consumers. Instead of introducing new distortions, the industry urged the government to focus on structural reforms, including rationalising high import premiums and strengthening local refining capacity to reduce reliance on costly imports.
Meanwhile, concerns are also mounting over a potential LNG shortage. With one terminal already shut down and the second expected to cease operations from April 2, supply constraints could intensify as electricity demand rises during the summer months. Power producers warn that LNG prices have surged to levels comparable with furnace oil, adding further pressure on the energy sector.
Analysts caution that without policy stability and coordinated action, Pakistan’s energy supply chain could face significant disruptions in the coming weeks.
Story by Zafar Bhutta
