Refineries contribute around Rs22bn to diesel price relief since August 20

Pakistan’s domestic refineries have contributed an estimated Rs22 billion towards government efforts to contain high-speed diesel (HSD) prices since August 20 by accepting a cap on the diesel crack spread, according to industry estimates.

 

Under the revised HSD pricing mechanism agreed with the government, the allowable diesel crack was capped at around $41.89 per barrel, limiting the benefit refiners could receive from higher international diesel margins.

 

Industry calculations show that the average international diesel crack since the formula was revised has been around $51.85 per barrel, nearly $10 above the capped level. Including the previous pricing benchmark premium, refiners estimate the effective differential at around $15.06 per barrel.

 

With domestic refineries producing approximately 5.1 million barrels of HSD since August 20, the estimated foregone benefit amounts to around $76.8 million, equivalent to roughly Rs21.5 billion.

 

PARCO accounts for the largest estimated share at around 44%, or Rs9.5 billion. NRL and Cnergyico Pakistan each account for around 16%, contributing approximately Rs3.4 billion apiece, while PRL’s share is estimated at Rs3 billion and ARL’s at around Rs2.4 billion.

 

The refinery-wise figures are estimates based on production shares and do not represent audited company-level contributions.

 

Refiners have opposed proposals for a further reduction in the HSD crack ceiling, arguing that the existing mechanism already limits their ability to benefit from international diesel prices. They have also warned that prolonged pressure on refining margins could affect crude procurement, refinery utilisation and future investment.