The federal government has banned private oil marketing companies (OMCs) from importing high-speed diesel (HSD) during the current fiscal year, granting Pakistan State Oil (PSO) exclusive authority to handle diesel imports. The move is part of a broader fuel supply strategy aimed at protecting consumers from rising international oil prices while ensuring uninterrupted petroleum supplies amid regional geopolitical uncertainties.
The decision was approved by the federal cabinet and communicated to the Oil and Gas Regulatory Authority (OGRA) through revised policy guidelines issued by the Petroleum Division. Alongside the diesel import ban, the government has also imposed limits on petrol imports by private OMCs, linking their import allocations to their historical market share and sales performance.
According to the new policy, only PSO will be allowed to import HSD throughout FY2026-27, while private OMCs will continue to import petrol only after receiving approval from OGRA under the existing monthly Product Review Meeting (PRM) mechanism.
Govt Restricts Private Petrol Imports
While private OMCs have not been completely barred from importing petrol, the government has introduced stricter controls. Petrol import quotas will now be determined based on each company’s previous market share, with a minimum cargo size of 10,000 tonnes.
The policy also introduces strict penalties for companies failing to meet their import commitments. Any OMC that delays scheduled imports, fails to import within the agreed delivery month, or defaults on committed refinery upliftments will lose eligibility for additional petrol import allocations for the next nine months.
Officials believe the measure will improve supply discipline, discourage speculative imports, and ensure a more stable domestic fuel market.
PSO to Sign Long-Term Petrol Supply Deal with Oman
As part of the government’s fuel security strategy, PSO will also enter into a long-term petrol supply agreement with OQ Trading of Oman.
The agreement comes amid concerns over the security of global energy supplies following disruptions linked to the closure of the Strait of Hormuz, one of the world’s most critical oil shipping routes. The government believes securing long-term contracts with reliable suppliers will reduce supply risks and improve Pakistan’s energy security.
The arrangement mirrors the existing long-term diesel supply agreement between PSO and Kuwait Petroleum Company (KPC), which has remained the primary supplier of imported HSD to Pakistan.
OGRA to Publish Daily Petroleum Prices
The revised policy introduces a significant change in petroleum pricing.
OGRA has been directed to calculate and publish ex-depot prices of petrol and diesel every day on its official website without requiring approval from the federal government or the prime minister. However, the Director General (Oil) will continue to receive official notifications of each price publication.
Although OGRA currently calculates petroleum prices internally and shares them with the Petroleum Division, it has not publicly displayed daily prices on its website for more than a decade after the federal government resumed the political responsibility for announcing fuel prices.
The new framework is expected to improve transparency and provide consumers with timely access to fuel price information.
Seven-Day Rolling Average to Determine Fuel Prices
The government has also revised the pricing methodology for imported petroleum products.
The import price for both petrol and HSD will now be calculated using a seven-working-day rolling average of the published Platts Arab Gulf Free on Board (FOB) assessments.
For petrol, the benchmark will be MS 92 RON, while HSD 10 parts per million (ppm) sulphur will serve as the diesel benchmark.
Import premiums, incidentals, and customs duties will continue to be based on PSO’s actual imported cargoes using a weighted average over the same seven-day period.
If PSO does not import petrol during the rolling seven-day period, authorities will use the calendar year-to-date average of premiums, incidentals, and customs duties. Once the proposed long-term supply agreement with OQ Trading becomes operational, the contract premium will automatically be applied whenever no fresh PSO imports are available during the review period.
Similarly, if PSO does not import HSD during the seven-day window, the pricing mechanism will rely on the existing Kuwait Petroleum Company term-contract premium along with the calendar year-to-date averages for other import costs.
Existing Pricing Components to Continue
Apart from the revised import policy, the government has decided to retain all existing pricing components.
These include exchange rate adjustments, Refinery Regulatory Duty (RRD), Research Octane Number (RON) adjustments, HSD sulphur penalties, and the Inland Freight Equalisation Margin (IFEM), which will continue to be applied under the current framework.
The Petroleum Levy will also remain in place, although its rate cannot exceed the ceiling approved by the federal cabinet. The Finance Division will continue to determine the applicable levy rate during the fiscal year before the Petroleum Division issues the formal notification.
Outlook
The government says the new policy is designed to strengthen Pakistan’s fuel supply chain, improve market discipline, enhance pricing transparency, and minimise the impact of international oil market volatility on domestic consumers while ensuring adequate petroleum availability throughout the fiscal year.