ISLAMABAD(National Times)- The government has imposed a complete ban on importing high-speed diesel (HSD) by private oil marketing companies (OMCs). Instead, only the state-owned Pakistan State Oil (PSO) will handle imports for the current fiscal year.
This is part of the federal cabinet’s decisions, which also capped petrol import quantities by private OMCs based on their past sales. The decisions are premised on the Petroleum Division’s request in the wake of ‘prevailing market conditions and in order to minimise the impact of rising petroleum prices on consumers’.
Under the decision, PSO would also enter a long-term supply contract with OQ Trading of Oman for petrol imports, in view of security of supplies needed in view of the closure of the Strait of Hormuz.
The decisions have been conveyed to the Oil & Gas Regulatory Authority (Ogra) as fresh policy guidelines for fuel arrangements and a revised pricing mechanism for petroleum products. “HSD import to be allowed only through PSO for FY27,” the guidelines said.
Govt caps petrol imports by private OMCs
In case of petrol, imports would be allowed to OMCs with the approval of Ogra through the existing mechanism of monthly product review meetings (PRMs) as per their market share for prior months with minimum import parcel of 10,000 tonnes.
“In case of default in petrol import commitment by any OMC or delay beyond agreed month of delivery or default in committed upliftment from refineries, it would be disqualified from grant of further import allocation for next nine months by Ogra”, the guidelines read.
All other parameters, including exchange rate adjustment, refinery regulatory duty (RRD), Research Octane Number (RON) and HSD Sulphur penalties, and inland freight equalisation margin (IFEM) settlement, shall remain unchanged and applicable as per existing practice.
For the purpose of pricing for both petrol and HSD, the import price freight-on-board (FOB) shall be computed on a seven working days rolling average of the published Platts Arab Gulf assessments for the respective product, i.e. MS 92 RON (petrol) and HSD 10 ppm (sulphur particles per million). “Price will be announced daily by Ogra” and would remain unchanged on Saturday and Sunday.
To work out import premium, incidentals and customs duty for both petrol and diesel, the benchmark would remain the PSO. The weighted average of actual premiums, incidentals and customs duty of the PSO imported cargoes shall be applied in case of seven days of rolling averages. In case of no import of petrol by PSO in the rolling seven working days, the calendar year-to-date (CYTD) average of premium, incidentals and customs duty shall be applied.
Further, in case a long-term supply arrangement is concluded between PSO and any foreign suppliers, e.g., OQ Trading Oman, the premium under such arrangement shall be applied for determination of petrol prices in case of no import during the last seven working days. This practice is similar to the arrangement already in place for HSD, which is mostly imported through a long-term arrangement with Kuwait Petroleum Company (KPC).
In case of no import of HSD by PSO in the last seven working days, the KPC term-contract premium shall be applied while incidentals and customs duty shall be applied on the calendar year-to-date average.
Under the policy guidelines, “Ogra shall compute and publish the ex-depot prices of petroleum products on a daily basis on its official website, without the requirement of approval from the federal government/prime minister. DG Oil Office would be intimated of each publication”.
Interestingly, the same practice of price computation by Ogra is currently in place, which intimates its working to the DG Oil, except that Ogra had stopped publishing prices more than a decade ago on its website after the government reclaimed the price-setting role for political reasons. There is no legal requirement at present for the prime minister to approve petroleum prices.
The instructions also state that the petroleum levy (PL) rate shall not exceed the upper limit prescribed by the cabinet. “Within the said limit, the applicable rates of PL for the fiscal year will be advised by Finance Division to Petroleum Division for notification.”
