Oil industry seeks higher HSD prices

• Industry seeks an increase of Rs10 to Rs12 per litre.
• Companies already lost Rs11 billion in second half of July.
• Industry may face Rs24-Rs25 billion in loss if prices reduced, OCAC warns.

ISLAMABAD: In a letter addressed to the Oil and Gas Regulatory Authority (OGRA), Pakistan's oil industry, 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.

The News reported that the industry sought a rise of Rs10 to Rs12 per litre due to significant losses incurred from higher import costs and lower domestic prices.

The OCAC said diesel prices should align with the actual premium of $11.50 per barrel, given the latest cargo imported by Pakistan State Oil (PSO) — the country's largest fuel supplier.

"This would lead to an increase in the HSD price by Rs10 to Rs12 per litre," the OCAC said.

The industry warned that if the government adheres to its own understanding of the Economic Coordination Committee's decision from July 2020, meant to ensure precise inventory cost recovery; it could maintain the existing price of diesel, leading to a loss of Rs9billion to Rs8 for the sector.

The OCAC also warned that if the outgoing government reduces the diesel price to woo voters for upcoming elections, then the oil industry may face a loss of Rs24 billion to Rs25 billion.

The refineries and oil marketing companies have already braved a loss of Rs11 billion in the second half of July because of the forced reduction of HSD by Rs7 per litre, the OCAC said.

The OCAC also informed that there had been no import of HSD during the second fortnight of July. To avoid further losses for the industry, OCAC urged OGRA to work out HSD pricing for the first fortnight of August based on the actual premium applicable on the latest HSD cargo imported by PSO, which stands at $11.50 per barrel.

The OCAC also asked the regulator to arrange a meeting with industry members alongside OGRA's finance and supply chain teams to arrive at an amicable solution.

It argued that the meeting would give the industry an opportunity to thoroughly present its perspective, ensuring that the price for the first fortnight of August is calculated considering the industry's input.