Pakistan’s oil sector, represented by the Oil Companies Advisory Council (OCAC), has requested an increase in the price of high-speed diesel (HSD) for the first half of August in a letter written to the Oil and Gas Regulatory Authority (OGRA).
According to The News, the sector demanded an Rs10 to Rs12 per litre increase because of huge losses caused by rising import costs and lower domestic prices.
Given the current cargo imported by Pakistan State Oil (PSO), the country’s major fuel provider, the OCAC said diesel rates should be in line with the actual premium of $11.50 per barrel.
“This would result in an increase in the price of HSD by Rs10 to Rs12 per litre,” the OCAC stated.
The industry has warned that if the government follows its own interpretation of the Economic Coordination Committee’s decision from July 2020, which is supposed to ensure precise inventory cost recovery, it may maintain the current diesel price, resulting in a loss of Rs9 billion to Rs8 billion for the sector.
The OCAC also cautioned that if the outgoing government lowers fuel prices to entice voters in the approaching elections, the oil business could lose Rs24 billion to Rs25 billion.
According to the OCAC, the refineries and oil marketing businesses have already suffered a loss of Rs11 billion in the second half of July as a result of the forced lowering of HSD by Rs7 per litre.
The OCAC also stated that no HSD was imported during the second two weeks of July. To minimise future losses for the industry, OCAC recommended OGRA to calculate HSD pricing for the first two weeks of August based on the real premium applied on the most recent HSD cargo imported by PSO, which is $11.50 per barrel.
The OCAC also requested that the regulator convene a conference with industry representatives, as well as OGRA’s finance and supply chain teams, in order to reach an agreeable settlement.
It stated that the conference would allow the industry to completely explain its viewpoint, guaranteeing that the price for the first two weeks of August is calculated with the industry’s involvement.