Refiners oppose HSD pricing formula change, warn of investment risk

Pakistan's refiners have pushed back against reports that the government may revise the high-speed diesel (HSD) pricing formula again, according to Mettis Global. In a letter to the government, the industry argued that frequent changes could disrupt refinery operations and reduce confidence among investors. The formula has already been revised several times in recent months, most recently on August 20, 2026.

The main concern is a reported cut in the HSD crack ceiling from $41.89 to $30 per barrel, which refiners say could lower diesel retail prices by roughly Rs18 to Rs20 per litre. They contend the formula does not reflect current international premiums, with Saudi Aramco's October premium set at minus $2 per barrel while actual cargoes are reportedly being offered at $15 to $20 premiums. That gap, they said, is already complicating October shipment plans and may push refineries to reduce throughput rather than increase output ahead of seasonal demand.

The industry also linked the issue to planned investments of $5 to 6 billion in refinery upgrades under the Brownfield Refining Policy, saying such projects need stable policy, transparent pricing and financial stability. Refiners also called for a Rs1.22 per litre rise in oil marketing company margins to be notified without delay, noting that these have not moved since September 2023 despite inflation and higher compliance costs. They added that they are ready to discuss their concerns with the government.