The Oil Company Advisory Council (OCAC) has proposed to the government that the premium on High-Speed Diesel to Oil Marketing Companies should be benchmarked based on Pakistan’s State Oil’s (PSO) latest tendered premium, which will resolve the issue of looming diesel crises in the country.
To encourage other Oil Marketing Companies (OMCs) to resort to the import of High-Speed Diesel (HSD), the government should allow the same premium to the OMCs, which is being allowed to state-owned PSO on the import of diesel through an international tender, official sources told ProPakistani.
The OCAC has proposed to the Ministry of Energy (Petroleum Division) that the premium on HSD imports should be benchmarked based on PSO’s latest tendered premium with the exclusion of Kuwait Petroleum Company (KPC) PSO premium for the price computation. The proposal was floated by OCAC to encourage imports of HSD by other OMCs, which are at a disadvantageous position, if PSO KPC premium is used as a benchmark for HSD pricing in the country given the geopolitical situation in the world and is for a transition period of April to June 2022.
Currently, Pakistan State Oil has a contract for the supply of HSD under a government-to-government (G2G) arrangement with Kuwait Petroleum Corporation (KPC). Since the contract volume is fully utilized by the PSO there is no space available for other OMCs. To fill the supply-demand gap of High-Speed Diesel, PSO also resorts to procuring diesel through floating international tenders. For the end of March, PSO’s tendered premium on import of HSD is $8.15/barrel while the premium on KPC long-term contract is $2.50/barrel, the source said. Unless the OMCs are allowed to PSO benchmark.
It is worth mentioning here that last week senate Standing Committee on Petroleum had expressed apprehension about the looming High-Speed Diesel crisis in the country in near future and advised that the government should take timely measures to prevent any such crisis. The provision of the PSO tendered premium for other OMCs will boost the import of HSD, the source claimed.
