PSO board approves five-year PARCO deal to increase petrol, diesel supplies and cut furnace oil allocations

Profit, citing Business Recorder, says the PSO board has given the green light to a fresh five-year supply pact with Pak Arab Refinery Limited (PARCO). Under the terms, monthly RON 92 petrol volumes for PSO rise from 18,000 to 50,000 tonnes, and high-speed diesel more than doubles, reaching 105,000 tonnes from 50,000. Furnace oil moves the other way, with monthly allocations falling to 5,000 tonnes from 32,000 as power generators use less of it.

The contract signed on August 1, 2011 lapsed on July 31, 2021, but PARCO said in March 2025 it stayed effective until a replacement was executed. Talks dragged as both sides reworked pricing, payments, invoicing, letters of credit and quality terms. Under the revised deal, petrol grades RON 92 and RON 95 must now meet Euro-5 specifications. The late-payment formula drops the 300-basis-point escalation that applied after 30 days, according to sources cited by Business Recorder.

Payment is now flexible: PSO may choose between a letter of credit, issued irrevocably, and paying PARCO directly when the bill falls due. Annual furnace oil procurement falls from 384,000 tonnes to 60,000 tonnes, which PSO management expects to keep working capital from being locked in inventory as demand softens. Cnergyico Pk Limited's renewal was left out because the company declined to commit to dropping its court cases against PSO, while Attock Refinery Limited (ARL) went to the board as well.