Hike in prices of POL products: OMCs get Rs113bn windfall profits?

ISLAMABAD: The government’s decision to apply a Rs 55 per litre price jump to current fuel reserves has triggered allegations of enabling oil marketing companies (OMCs) to make Rs 113 billion windfall profits in inventory gains, though industry representatives and government advisors argue that the pricing model—based on international Platts averages—requires them to replenish sold stock with much more expensive fuel,

Officials of Petroleum Division on condition of anonymity said that the new price is not based on the cost of a particular shipment purchased weeks earlier but fuel prices determined by using the average Platts benchmark price for petrol and high speed diesel (HSD) during the pricing period, along with exchange rate adjustments.

Oil companies are legally required by OGRA to maintain around 20 days of mandatory stock (and recently even higher due to regional tensions). This means companies are continuously selling fuel while simultaneously buying new cargo at prevailing international prices to replenish the same inventory. So, when a litre of fuel is sold today, it must be replaced with a litre purchased at current international prices to keep reserve at required levels, officials maintained.

Pakistan State Oil (PSO), launched two import tenders each for petrol and diesel outside the Strait of Hormuz as a precaution, although both product stocks are among the highest in the country at present.

Petroleum Minister Ali Pervaiz Malik said this week that three oil shipments are expected to reach Pakistan.

Pakistan’s petrol and diesel stocks are over 500,000 tonnes, enough for 26 and 25 days’ cover. Meanwhile, Saudi Arabia has already been requested to provide oil supplies through an alternative Red Sea route

Petrol prices announced on 1 March 2026 were based on Platts fortnightly average of USD78 per bbl and on 6 March 2026 Platts was USD106 per bbl.

A representative of OMCs said that the companies were making profits till crude price was hovering around USD78 a barrel. The jump to USD106 requires an increase in retail fuel price by Rs 55 per litre, he said. In the absence of the rise, oil companies could incur losses, depending on inventory levels and other factors,” he added.

Brent crossed USD100 per barrel early Monday and soared further to a 45-month high of nearly USD120 at one point, amid escalating conflict in West Asia. After the day’s trading, it closed around USD 102.

In December 2025 petrol prices were reduced by around Rs 24 per litre after international prices declined. Refineries and OMCs were holding mandatory inventory purchased at higher prices, which caused billions of rupees in inventory losses. Similar situation occurred in 2022 and 2023, when multiple price cuts forced companies to sell higher-cost inventory at lower prices.

Copyright Business Recorder, 2026