Pakistan State Oil (PSO) has been granted exclusive authorization to import high-speed diesel (HSD) with the aim of fulfilling the country’s domestic demand for this essential fuel.
The approval from the Petroleum Division signifies a significant development, as PSO will now act as the sole entity responsible for the importation of HSD on behalf of all oil marketing companies (OMCs) in Pakistan. This decision is expected to have far-reaching economic and operational benefits for the country’s energy sector.
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To implement this arrangement, the Oil and Gas Regulatory Authority (OGRA) has been directed to engage with representatives from the oil industry and formulate a comprehensive framework for the agreement. This collaborative effort is designed to ensure a smooth and efficient process for the importation of HSD, with the potential to streamline operations within the sector.
Historically, PSO has been engaged in the importation of 90 percent of the country’s HSD. However, with the recent approval, PSO will now assume the responsibility of importing the entire stock of diesel. This strategic move not only aims to meet the increasing demand for diesel in the domestic market but also addresses concerns raised by other OMCs. These concerns primarily revolve around potential fluctuations in the domestic price of HSD, which were previously influenced by PSO’s imports and subsequent adjustments related to premiums and exchange rates.
PSO’s existing arrangement involves importing HSD from Kuwait Petroleum Corporation (KPC) through a government-to-government agreement. This approach has provided PSO with certain advantages, including favorable premium terms and a structured settlement process through letters of credit (LC).
The concept of “premium” in this context refers to the amount paid above or below the market price of a petroleum product based on demand dynamics. As Pakistan relies on diesel imports to fulfill its domestic demand, especially since local refineries cannot produce sufficient quantities to meet the nation’s needs, the approval for PSO to exclusively handle HSD imports is seen as a strategic move to enhance efficiency and address market concerns.
In conclusion, the government’s decision to grant PSO the exclusive right to import high-speed diesel represents a pivotal step in optimizing the importation process and streamlining operations in the oil and gas sector. This move is expected to have positive implications for the stability of diesel prices and overall energy supply in the country.
