ISLAMABAD – The Oil Companies Advisory Council (OCAC) has raised serious concerns over what it describes as continued unilateral government interventions in petroleum pricing, warning that recent decisions have inflicted heavy financial losses on the downstream oil sector and could undermine investor confidence.
In a statement, the council said abrupt changes in pricing mechanisms over recent months have created “severe financial consequences” for oil marketing companies (OMCs) and refineries, estimating an immediate inventory-related impact of around Rs104 billion based on current stocks of motor spirit and high-speed diesel.
It argued that the losses were not the result of operational inefficiencies or market competition, but of policy decisions taken without adequate consultation with industry stakeholders responsible for maintaining fuel supply chains and strategic petroleum reserves.
“The latest reduction in prices was achieved at the expense of the downstream petroleum industry by adopting a new pricing formula, resulting in an unprecedented financial shock,” the statement said.
OCAC noted that while the industry had supported government efforts to maintain energy security during periods of volatility, including sustaining nationwide fuel distribution and holding mandatory inventories, the financial burden of such policy shifts was becoming increasingly difficult to absorb.
It pointed out that OMC margins have not been revised since September 2023 despite rising operating costs, inflationary pressures and expanding compliance requirements. The council also cited outstanding Price Differential Claim payments of about Rs66.7 billion as an additional strain on liquidity.
The statement further warned that continued policy unpredictability could deter foreign investment in Pakistan’s downstream petroleum sector, which it said has historically attracted significant capital from international energy companies for infrastructure and logistics development.
“In the absence of regulatory consistency and policy stability, the consequences are no longer a matter of risk but of certainty: withdrawal of investors and potential insolvency of weaker participants,” it warned.
OCAC said it fully supports consumer relief measures but stressed that such relief should not come at the expense of industry balance sheets, calling the current approach “commercially unsustainable and inequitable.”
The council has requested an urgent meeting with the Ministry of Energy to discuss the establishment of an “equitable and consultative pricing framework,” protection of mandatory strategic inventories from abrupt value erosion, and measures to restore investor confidence in the sector.
It said the industry remains committed to ensuring uninterrupted fuel supply across the country, but cautioned that continued unilateral interventions could weaken the financial foundations of a sector it described as essential to Pakistan’s energy security.
