The Oil Companies Advisory Council (OCAC) has warned that another change to the high-speed diesel (HSD) pricing formula could hurt refinery operations. It also said the move could threaten planned investments in Pakistan’s refining sector.
In a letter sent to Energy Minister Ali Pervaiz Malik on September 8, the council raised concerns over a proposed reduction in the HSD crack ceiling.
According to the OCAC, the government is considering reducing the HSD crack ceiling from $41.89 per barrel to $30 per barrel. The council estimated that this change could lower the price of HSD by around Rs18 to Rs20 per litre.
The council said the proposed change comes after several revisions to the HSD pricing mechanism in recent months. The latest revision was introduced on August 20, 2026.
OCAC urged the government to maintain a consistent and predictable fuel pricing mechanism. It warned that frequent changes could create uncertainty for refineries and other businesses operating in the downstream oil sector.
The council also questioned whether the current HSD pricing formula accurately reflects market conditions. It said the existing formula does not fully account for current market premiums on imported cargoes.
According to the council, the Aramco premium for October is currently around minus $2 per barrel. However, actual cargoes are reportedly being offered and booked at premiums ranging from $15 to $20 per barrel.
The difference between the reference premium and actual market prices has raised concerns among refinery operators. OCAC said an abrupt reduction in the HSD price could make it difficult for refineries to book October cargoes.
It warned that high-premium cargoes could become financially unviable under the proposed pricing change. Refineries may then have to reduce their throughput instead of increasing production ahead of seasonal demand.
The council said the refining industry has supported the government during difficult periods. However, it argued that refineries cannot continue absorbing the financial impact of repeated policy interventions.
OCAC also highlighted the importance of policy stability for upcoming investment projects. Pakistan’s refineries are preparing to invest between $5 billion and $6 billion in upgrading projects under the Brownfield Refining Policy.
The council said stable pricing policies are important for these investments. Frequent changes could affect investment decisions and the financial planning of refinery companies.
The OCAC also raised the issue of oil marketing company margins. It said OMC margins have not been revised since September 2023.
According to the council, OMCs have faced higher inflation, operating costs and compliance expenses during this period. They have also faced additional regulatory requirements.
The council has therefore requested immediate notification and implementation of a pending Rs1.22 per litre increase in OMC margins. It said the adjustment is necessary to reflect the rising costs faced by oil marketing companies.
OCAC has urged the government to ensure consistency and continuity in the fuel pricing formula. It said predictable policies are important for the stability of Pakistan’s downstream oil industry.
The government’s response to the council’s concerns will be important for both fuel pricing and refinery operations. Any change in the HSD formula could affect diesel prices, refinery economics and future investment plans.
For consumers, a lower HSD price could provide some relief. However, the refining industry has warned that an abrupt reduction could create supply and investment challenges if market costs are not properly reflected.
Also read: Pakistan to Introduce Daily Petrol and Diesel Prices
