Govt centralises diesel imports, grants Pakistan State Oil sole authority

ISLAMABAD:In a major move to curb foreign exchange outflows, the government has barred all oil marketing companies from importing High Speed Diesel (HSD), allowing only Pakistan State Oil (PSO) to import diesel, tightening control over Pakistan’s multi-billion-dollar fuel import bill.

Official sources in petroleum division on condition not to be named informed that  the federal government has decided that no import of High-Speed Diesel (HSD) by oil marketing companies (OMCs), other than Pakistan State Oil (PSO), will be permitted, in what appears to be a decisive attempt to centralize fuel procurement and manage the country’s rising external account pressures.

According to the decision, any additional requirement for HSD imports by other OMCs will now require specific approval from the National Coordination and Management Council (NCMC), effectively placing strict oversight on diesel import volumes and limiting market participation, sources added.

A senior refinery official told Profit that the country currently holds 28 days’ worth of HSD stocks, with local refineries meeting 70 percent to 80pc of the national demand.

According to industry sources, the move has come against the backdrop of Pakistan’s massive fuel import bill, which stands at an estimated $20 to $22 billion annually, making it one of the largest contributors to the country’s current account deficit and persistent pressure on foreign exchange reserves.

Pakistan’s fuel economy remains one of its most critical and under-reported pressure points, with the country paying an estimated $20–22 billion annually in fuel imports, translating into a staggering $1.2–1.5 billion monthly outflow under normal conditions—figures that surge further during global price shocks. The country consumes roughly 500,000 barrels of oil per day, with a heavy reliance on imports to meet this demand, while combined petrol and diesel consumption stands at nearly 58–60 million liters per day. High-Speed Diesel (HSD), the backbone of Pakistan’s transport and logistics sector, accounts for a major share, with an annual demand of around 6 to 6.5 million tonnes—equivalent to approximately 500,000 tonnes per month. Despite domestic refining, Pakistan imports substantial volumes of HSD every year, costing billions in precious foreign exchange.

It is relevant to note that Data released by AHL Research of Arif Habib Limited shows that Pakistan’s petroleum sales came under pressure in April 2026, with total volumes declining 7% YoY and 6% MoM to 1.36 million tons amid elevated fuel prices and subdued demand. The decline was more pronounced in high-speed diesel (HSD), where volumes fell 12% YoY, driven by higher prices—averaging PKR 431.97 per litre despite the removal of levy—and weaker agricultural activity, particularly lower tractor sales. Excluding furnace oil (FO), total petroleum sales dropped 11% YoY to 1.22 million tons, reflecting broad-based weakness across key transport fuels.

 

On a monthly basis, HSD also remained under pressure, with offtake declining 7% MoM to 0.55 million tons, contributing to the overall contraction in petroleum demand. In contrast, FO sales surged sharply—up 63% YoY and 56% MoM—supported by increased reliance on FO-based power generation amid RLNG supply disruptions. Despite the short-term slowdown, cumulative petroleum sales in 10MFY26 rose 4% YoY to 13.76 million tons, with HSD volumes recorded at 5.90 million tons, underscoring its continued significance as the largest transport fuel segment in the country.

 

As per industry sources, by restricting imports to PSO, the government appears to be aiming for better coordination of supply, avoidance of excess imports, and improved inventory management, particularly at a time when global oil price volatility continues to strain Pakistan’s fragile economy.

However, the decision is likely to trigger concerns among private sector OMCs, which may view the restriction as a setback to competition and market dynamics. Industry stakeholders have long argued that a level playing field is essential to ensure efficiency, price competitiveness, and uninterrupted supply across the country, said the industry sources.

 This policy could help streamline import planning and reduce unnecessary dollar outflows in the short term, but its long-term impact will depend on how effectively PSO manages supply and whether the approval mechanism through NCMC remains transparent and responsive, said an industry source .

With Pakistan heavily dependent on imported fuels and global prices remaining unpredictable, the government’s latest move signals a shift towards tighter administrative control over the petroleum supply chain—placing energy security and foreign exchange management at the center of economic policymaking.