The Oil Companies Advisory Council (OCAC) has opposed the government’s proposal to reduce the high-speed diesel (HSD) price by changing the existing pricing formula, warning that the move could put additional pressure on refineries and affect planned investments in Pakistan’s oil sector.
In a letter sent to Energy Minister Ali Pervaiz Malik on September 8, 2026, the OCAC said the government was considering reducing the HSD crack ceiling from $41.89 per barrel to $30 per barrel.
According to the council, such a change could lower the retail price of diesel by approximately Rs18 to Rs20 per litre. However, the industry has warned that a sharp reduction in the pricing ceiling could create difficulties for refineries and disrupt the supply chain.
OCAC Warns Against Another Pricing Formula Change
The OCAC said the proposed reduction would come after several changes to Pakistan’s HSD pricing mechanism in recent months.
The council specifically referred to the latest revision introduced on August 20, 2026, arguing that repeated changes have created uncertainty for companies operating in the downstream oil sector.
The industry body urged the government to maintain a consistent, predictable and transparent fuel pricing mechanism, particularly because refineries and other industry players make procurement and investment decisions based on expected market conditions.
The OCAC warned that frequent changes to the pricing formula could make it difficult for companies to plan their operations and future investments.
Diesel Price Could Fall by Rs18 to Rs20
Under the proposal being considered by the government, the HSD crack ceiling would be reduced from $41.89 per barrel to $30 per barrel.
The OCAC estimated that this could result in a reduction of around Rs18 to Rs20 per litre in the price of high-speed diesel.
While a lower diesel price could provide relief to consumers and businesses, the oil industry has argued that the proposed mechanism may not accurately reflect prevailing international market conditions.
The council said the existing pricing formula already fails to capture the actual premiums being demanded in the international market.
Refineries Face Higher Cargo Premiums
The OCAC highlighted a significant difference between the official benchmark used in the pricing mechanism and the premiums at which actual diesel cargoes are being offered.
The council said the Aramco premium for October stands at minus $2 per barrel, while cargoes are currently being offered and booked at premiums ranging from $15 to $20 per barrel.
According to the industry body, this difference could make diesel imports and refinery operations increasingly difficult if the HSD crack ceiling is suddenly reduced.
The OCAC warned that refineries could struggle to book October cargoes at prevailing market premiums if the proposed pricing change is implemented.
Lower Prices Could Affect Refinery Throughput
The oil industry has also warned that the proposed reduction could have an unintended impact on domestic fuel production.
The OCAC said high-premium cargoes could become uneconomical for refineries under the revised pricing structure.
Instead of increasing production ahead of seasonal demand, refineries could be forced to reduce throughput if imported crude and other feedstock become financially unviable under the new pricing mechanism.
Such a situation could potentially affect the availability of petroleum products in the domestic market, particularly during periods of higher seasonal demand.
The council therefore urged the government to consider the broader impact of any change to the HSD pricing formula before implementing it.
$5–6 Billion Refinery Investments at Stake
The OCAC also highlighted the scale of planned investment in Pakistan’s refining sector.
According to the council, refineries are preparing to invest approximately $5 billion to $6 billion in upgrading and modernization projects under the Brownfield Refining Policy.
The proposed investments are expected to support improvements in refinery infrastructure and operations.
The OCAC argued that long-term projects of this scale require a stable and predictable policy environment.
Frequent or unexpected changes to fuel pricing mechanisms, it said, could affect investor confidence and make it more difficult for companies to finalize major investment decisions.
Oil Marketing Companies Seek Higher Margins
The OCAC also raised the issue of pending increases in margins for oil marketing companies (OMCs).
The council said OMC margins were last revised in September 2023, despite increases in inflation, operating expenses, compliance costs and regulatory requirements since then.
It urged the government to immediately notify and implement the pending Rs1.22 per litre increase in OMC margins.
According to the council, the increase is necessary to account for the rising costs faced by oil marketing companies and ensure the financial sustainability of the downstream oil distribution network.
Industry Calls for Stable Fuel Pricing Policy
The OCAC said the refining industry has continued to support the government during difficult periods but warned that companies cannot repeatedly absorb the financial impact of policy interventions.
The council stressed that fuel pricing policies should balance consumer interests with the financial realities faced by refineries and oil marketing companies.
It has therefore requested the government to ensure consistency and continuity in the fuel pricing formula instead of introducing frequent changes.
The debate over the HSD pricing mechanism comes at a time when Pakistan’s oil industry is preparing for significant investment while facing changing international fuel markets.
The OCAC believes maintaining a predictable pricing framework will be essential for ensuring that refineries can continue procuring fuel efficiently, maintaining production levels and moving ahead with planned modernization projects.
For consumers, a reduction of Rs18 to Rs20 per litre could provide short-term relief, but the oil industry has warned that an abrupt pricing adjustment could create wider challenges for refinery operations and future investment.
The government will now have to weigh the potential benefits of lower diesel prices against the concerns raised by the oil sector as it considers the proposed changes to the HSD pricing formula.
Also read: Pakistan Losing Rs. 280 Billion Annually to Fuel Smuggling: OCAC
