Record premium paid on oil imports
Pakistan State Oil (PSO) has imported petroleum products at hefty premiums to meet the country's needs, but this high cost will put an additional burden on oil consumers, who are already reeling from exorbitant fuel prices.
Amid US-Israel and Iran war, which has choked the Strait of Hormuz – a critical waterway for oil shipments, Pakistan has paid the highest-ever premium on the purchase of petroleum products, leading to higher oil prices in the country.
PSO was paying a maximum premium of around $12 per barrel but later rates jumped to more than $34 per barrel, causing a record increase in domestic prices of petroleum products.
Sources told The Express Tribune that PSO, in a letter, drew attention of the Oil and Gas Regulatory Authority (Ogra) chairman to high premiums and the need to include them in oil prices.
PSO also referred to the recently revised pricing formula for petroleum products in the wake of ongoing geopolitical conflict and increasingly volatile international crude prices.
"We would like to highlight that the premium on the recently arrived HSD (high-speed diesel) cargo for PSO, namely MT Kaliban, from the Suez STS area is $35.612 per barrel," PSO authorities said, adding that similarly, the premium on cargoes expected to be imported later in April may be around the same level.
Directly including this premium of $35.6 in the upcoming HSD price revision will significantly increase the end-consumer price.
PSO said that based on the Gasoil Arab Gulf Platts published till April 7, 2026, the existing ex-refinery price of Rs496.97 per litre was expected to rise further by Rs122.76 per litre if the high premium was incorporated into the price.
"Considering the fact that HSD is mainly being imported by PSO at the moment, we recommend that these exceptionally high premiums may only be reimbursed to PSO and any other importing OMCs (oil marketing companies) rather than passing the same directly to the ex-refinery price," it said.
"If HSD prices are pegged to the pre-war premium of $5.10/bbl, the estimated impact on the upcoming end-consumer price would be approximately Rs60/litre. Alternatively, if pegged to the last applied premium of $23.15/bbl, the impact would be around Rs40/litre. This estimation is based on the assumption that the customs duty reimbursement mechanism is as per existing practice," PSO said, adding that the above mechanism would ensure that exceptional import margins were passed on to end-consumers only to the extent of actual cost incurred.
Moreover, the differential between PSO's actual import cost and the cost derived from the above benchmark values may be reimbursed to the company through the inland freight equalisation margin (IFEM) mechanism for all cargoes already awarded approval of the government of Pakistan.
A similar process should be followed for any other OMC, which has imported HSD during the current week. "We hope that due consideration will be given to the above highlighted suggestions," PSO authorities said.
The price differential claims (PDC) of OMCs are stuck following a decision of the government to freeze fuel prices. Ogra has recently processed a payment of Rs38 billion in PDC. These claims were paid to 34 OMCs.
Ogra has implemented the federal government's decision through establishing a mechanism, duly concurred by the government, aimed at improving transparency, efficiency and timeliness in the verification and release of PDC. The framework ensures a structured evaluation process, enabling expeditious settlement of legitimate and eligible claims so as to ensure robust financial discipline.