Pakistan’s oil industry has formally protested the record 18 to 20 percent cut in petroleum prices announced by the prime minister last week, saying the move was unilateral, inconsistent with the approved pricing mechanism, and financially damaging for refineries and oil marketing companies.
Industry officials say the latest reduction has caused an estimated Rs. 105 billion loss to oil refineries and OMCs, raising fears that some companies could face serious financial distress or even bankruptcy.
The protest has been led by the Oil Companies Advisory Council, which represents more than three dozen refineries and OMCs. In a letter to the government, the council expressed grave concern over what it called continued unilateral petroleum pricing interventions and their growing impact on the viability of Pakistan’s downstream petroleum sector.
According to industry representatives, the federal cabinet approved the pricing mechanism four times in less than three months, but the formula was repeatedly changed to the sector’s disadvantage during an already difficult period.
An industry executive said the government first used a 15-day average when prices were rising, then shifted to a weekly average as import premiums and war risk surcharges increased, and later moved to crude-based pricing instead of product import pricing.
In the latest move, he said, the government relied on three-month average premiums even though the actual benchmark of Pakistan State Oil was unavailable. He added that this happened despite petroleum imports being reviewed and approved by the National Coordination and Management Council, a recently created civil-military forum on energy supplies and pricing.
The industry argued that the ex-refinery price of diesel should have fallen by Rs. 30 per litre on June 19 under the prevailing formula, but was instead cut by Rs. 81 per litre through a cabinet decision taken by circulation without debate.
Officials said PSO alone was expected to suffer losses of around Rs. 50 billion after the latest price adjustment, while Pak-Arab Refinery Company could face losses of about Rs. 25 billion. Other companies are collectively expected to lose another Rs. 30 billion.
The OCAC has requested an urgent meeting with company chief executives on Monday or Tuesday, but according to official sources, that request has not been accepted for this week.
The council said the industry had repeatedly warned the government about the financial consequences of abrupt pricing decisions and rising policy uncertainty, but decisions continued to be made without meaningful consultation with stakeholders responsible for maintaining fuel supplies and strategic petroleum inventories.
It said the latest cut was imposed through another revised pricing formula, exposing companies to major financial losses. Based on industry stocks of around 505,000 tonnes of petrol and 655,000 tonnes of high-speed diesel, the council estimated the erosion in value at roughly Rs. 104 billion across refineries and OMCs.
According to the industry body, these losses represent a direct hit to working capital, liquidity, and shareholder value, and are not the result of inefficiency or market competition but of unilateral policy action.
The council said the industry had continued to support the government’s energy security objectives and prevent supply disruptions despite mounting pressure.
It warned that the petroleum sector, which had historically attracted significant foreign investment in storage infrastructure, logistics, retail development, and supply chain resilience, was now facing weakening investor confidence because of policy instability.
The body said those investments were made on the basis of regulatory consistency, but repeated abrupt interventions could lead to investor exits, insolvencies, and possible bankruptcies among weaker players.
The industry also said OMCs had continued to maintain nationwide distribution and strategic inventories despite severe working capital pressure, while refineries had supported national efforts by capping HSD margins, maintaining pre-war kerosene pricing for the armed forces, supplying jet fuel for Haj flights at pre-war rates, and contributing more than Rs. 7 billion to reduce the price differential claim.
The council said these were shared sacrifices made in the national interest, but cautioned that continued policy shocks could further weaken the sector.
