ISLAMABAD: The federal government has designated Pakistan State Oil (PSO) as the sole importer of high-speed diesel (HSD) for the 2026-27 fiscal year, while imposing new restrictions on petrol imports by private oil marketing companies (OMCs) as part of a broader strategy to safeguard fuel supplies and stabilise domestic petroleum prices.
The decisions, approved by the federal cabinet on the recommendation of the Petroleum Division, have been communicated to the Oil and Gas Regulatory Authority (OGRA) through revised policy guidelines aimed at addressing prevailing market conditions and minimising the impact of rising international oil prices on consumers.
PSO to Handle All Diesel Imports
Under the new policy, all HSD imports during FY2026-27 will be routed exclusively through PSO, effectively barring private OMCs from importing diesel.
To further strengthen supply security, PSO has also been authorised to negotiate a long-term petrol supply agreement with OQ Trading of Oman, a move intended to ensure uninterrupted fuel availability in light of potential disruptions to shipping through the Strait of Hormuz.
Private Petrol Imports Subject to Quotas
Private OMCs will continue to import petrol, but only with OGRA’s approval through the existing Monthly Product Review Meeting (PRM) mechanism. Import allocations will be based on each company’s historical market share, with a minimum cargo size of 10,000 metric tons.
The policy also introduces stricter compliance measures. Any OMC that fails to import its allocated petrol volumes, delays cargo deliveries beyond the approved month, or defaults on lifting committed refinery supplies will be barred from receiving additional import allocations for the next nine months.
Daily Petroleum Price Mechanism
The revised guidelines also formalise a daily petroleum pricing mechanism, under which OGRA will calculate and publish ex-depot prices of petrol and diesel each working day on its official website without requiring approval from the federal government or the prime minister. Prices announced on Fridays will remain effective over the weekend.
Petrol and diesel prices will be based on a seven-working-day rolling average of Platts Arab Gulf Free-on-Board (FOB) assessments for 92 RON petrol and 10 ppm sulphur diesel.
PSO to Remain Benchmark for Import Costs
The government has retained PSO as the benchmark importer for calculating import premiums, freight incidentals, and customs duties.
If PSO does not import petrol during the seven-day pricing window, the calendar year-to-date average of premiums, freight charges, and customs duties will be used. In the event that PSO finalises a long-term supply agreement with OQ Trading, the contractual premium under that arrangement will be applied when no recent imports are available.
A similar mechanism will continue for diesel, where pricing will rely on PSO’s long-term supply agreement with Kuwait Petroleum Corporation (KPC) whenever no HSD cargoes are imported during the relevant pricing period.
Other Pricing Components Unchanged
According to the new policy, other pricing variables—including exchange rate adjustments, Refinery Regulatory Duty (RRD), Research Octane Number (RON) adjustments, HSD sulphur penalties, and the Inland Freight Equalisation Margin (IFEM)—will continue to be applied under the existing framework.
The guidelines also specify that the Petroleum Levy (PL) will remain within the maximum limit approved by the federal cabinet, while the applicable levy rate for each fiscal year will be determined by the Finance Division and notified through the Petroleum Division.
The latest policy marks a significant shift in Pakistan’s petroleum import and pricing framework, with the government seeking tighter control over fuel supplies, enhanced energy security, and greater market stability amid continued volatility in global oil markets.
By Khaleeq Kiani
