Due to the default-like scenario that has been occurring in Pakistan since July 2022, international High Speed Diesel (HSD) suppliers have begun loading country-specific risk factors. In light of this, the Economic Coordination Committee of the cabinet approved raising the maximum premium for OMCs for the ensuing two months to $15.
To assure a stable supply of HSD over the next two months, the Ministry of Energy revealed this in a summary it sent to the ECC.
The market has become unstable and unpredictable as a result of the conflict between Russia and Ukraine, and suppliers have begun including country-specific risk factors in their premium quotations, such as LC confirmation and bank fees, in light of Pakistan’s default-like circumstances since July 2022.
This may be shown, according to the summary, by contrasting the actualized cost and freight premiums announced in the Arab Gulf (AG) Market with the spot prices set by PSO for MS imports from March to October 2022. It demonstrates that during the previous four months, suppliers loaded an average of $6 per barrel in surcharges.
A comparable comparison for HSD indicates an average cost and freight (C&F) premium of almost $9 per barrel, which was reported in the Arab Gulf market between March and October 2022.
The Oil Companies Advisory Council (OCAC) has asked for an urgent review and revision of the benchmarking to prevent the industry from collapsing, and has requested that the ECC consider and approve an upper limit of $15 per barrel for price computation by loading a country risk factor of US$6 per barrel. This will ensure sustainable HSD imports by the OMCs.
To read our blog on “ECC authorizes boosting petroleum levy on Hi-Octane Fuel,” click here
