Justification for HSD imports amid ample stocks questioned

KARACHI: With the country holding sufficient stocks of high-speed diesel (HSD) amounting to 520,000 metric tonnes (MT), there is little justification for allowing the import of an additional 120,000MT in March, analysts believe.

According to industry data, refinery production of HSD stood at 401,000 MT in February, while sales during the month totalled 428,000MT. By the end of February, the country had an HSD stockpile of 520,000MT.

Analysts described this stock as sufficient. “At a monthly sales rate of 428,000MT, a stock of 520,000 MT provides over 34 days of cover,” said Samiullah Tariq, head of research and development at Pakistan Kuwait Investment Company.

He said that domestic refineries were consistently producing over 400,000MT of HSD per month, which is already close to meeting demand. Commenting on the approval of a 120,000 MT HSD import by the Oil & Gas Regulatory Authority (Ogra), the analyst argued that with more than a month’s supply on hand and stable refinery production, there is no immediate risk of a shortage. Economic activity typically slows during Ramazan, meaning HSD sales could be around 450,000 MT. Given the ample stock and steady refinery output, allowing imports at this time could force local refineries to cut production.

Furthermore, with the rupee already under pressure, unnecessary imports of petroleum products add strain to foreign exchange reserves, Tariq said. Considering the available stock, consistent domestic production, and expected lower demand in March, the analyst assert that there is no strong justification for allowing 120,000 MT of HSD imports.

“The decision appears unnecessary from a supply security perspective and could negatively impact refinery utilisation and foreign exchange reserves,” Tariq said, adding that authorities should take a more prudent approach to import approvals, prioritising local production to reduce external dependencies.