Diesel imports rise despite ample local supply

KARACHI: Pakistan imported 2.03 million metric tonnes (MT) of high-speed diesel (HSD) in the financial year ending June 30, 2025 -- an increase of 200,000 MT compared to the 1.83 million MT imported in the previous year. The oil industry has described this as an “over-import”, given the sufficient production capacity of local refineries.

According to sector data, HSD imports fluctuated throughout the year, with the highest volume -- 306,000 MT -- imported in December. Industry sources told The News that a particular oil marketing company (OMC) was allowed to import HSD even though Pakistan State Oil (PSO) was already importing the fuel under a long-term contract with Middle Eastern suppliers, which was adequate to meet domestic needs.

They said that the prime minister had formed a committee to investigate the over-import of HSD, but it failed to produce any findings. “Another committee was later constituted, and it is still working on finalising its report regarding the necessity of these imports during the last financial year,” they added.

They noted that HSD stocks were sufficient in August and September, but demand surged in October and November following a crackdown on smuggled diesel, prompting additional imports. However, they alleged that the Oil and Gas Regulatory Authority (Ogra) allowed a specific OMC to import HSD in January, despite low demand. This led to a sharp decline in offtake from local refineries.

“The non-PSO imports stopped in May when the situation deteriorated,” a source revealed, “but HSD imports spiked again in June after the Iran border was closed due to the Israel-Iran conflict.”

Adil Khattak, chairperson of the Oil Companies Advisory Council (OCAC), told The News that local refineries are capable of meeting 60-65 per cent of the country’s HSD demand, with the remainder typically imported.

“Refineries have no objection to imports,” he said, “but they do object when their storage tanks are already full and more imports are allowed.”He explained that Ogra holds a monthly product review meeting to forecast HSD demand and supply. However, the regulator occasionally permits unnecessary imports under pressure, resulting in reduced refinery throughput and, in some cases, shutdowns.

Khattak emphasised that while imports cannot be entirely stopped, they must be aligned with local demand and production capacity. He added that Clause 35(G) of the Petroleum Rules permits imports only when domestic refineries are unable to supply the required volume.