Pakistan’s proposed move to deregulate fuel prices has raised alarms among some of the country’s top refiners, potentially stalling planned upgrades worth billions of dollars and threatening refinery closures. In a letter addressed to Pakistan’s oil regulator, the refiners expressed apprehension over the proposed changes, warning of potential “disastrous consequences” for the industry.
The Oil & Gas Regulatory Authority (Ogra) seeks to shift the responsibility of setting fuel prices from the government to oil marketers and refineries, aiming to lower prices for consumers. However, this shift could have significant implications for the refining sector, particularly regarding the requirement for fuel buyers to source supply from local refineries.
The refiners, including state-run Pakistan Refinery and private domestic refiners such as Pak Arab Refinery, Attock Refinery, Cnergyico, and National Refinery, emphasized their concerns about operating at full capacity and urged Ogra to consider their input before implementing any changes.
In their letter to Ogra, the refiners stressed the need for “pragmatic and supportive measures” to sustain the refining sector, cautioning against actions that could lead to permanent closures.
While Ogra acknowledged the aim of deregulation to boost competition and protect public interest, it emphasized the necessity of assessing the potential impact on refinery upgrades. Refiners highlighted the substantial investment of $5-6 billion in refinery upgrades, which not only promise cleaner, environmentally friendly fuels but also contribute to saving valuable foreign exchange for the country.
The dialogue between Ogra and the refiners underscores the complexity of balancing consumer interests with the viability of the refining sector. As discussions continue, stakeholders must navigate these challenges to ensure a sustainable and competitive fuel market in Pakistan.
