The Petroleum Division of the Ministry of Energy has granted approval for Pakistan State Oil (PSO) to solely import high-speed diesel (HSD) to fulfill the nation’s domestic demand, according to The News.
PSO’s proposal, submitted in September of last year, to import HSD on behalf of all oil marketing companies (OMCs) operating in the country has been accepted.
The Oil and Gas Regulatory Authority (OGRA) has been tasked with collaborating with the oil industry to establish a framework for this arrangement, which is anticipated to offer economic and operational benefits to the country.
The official document stated, “The Division has thoroughly examined the proposal and principally agrees with the proposal to the extent of exclusive import of HSD through PSO to meet the country’s HSD demand.”
While PSO currently imports 90 percent of the HSD, with the remaining 10 percent being imported by other OMCs, the complete importation of HSD by PSO is expected to address concerns and reservations raised by OMCs regarding domestic HSD pricing, which is based on PSO’s imports, premium, and exchange rate adjustments.
Industry sources noted that PSO imports HSD from Kuwait Petroleum Corporation (KPC) through a government-to-government agreement, which provides PSO with advantages in terms of premiums and letter of credit (LC) settlement. The local pricing of HSD is determined based on PSO’s premium.
This move to centralize HSD imports under PSO is expected to help meet the nation’s demand and streamline pricing concerns raised by other OMCs.
It is worth noting that local refineries in Pakistan do not produce enough HSD to fully meet domestic requirements, necessitating imports to bridge the gap.
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