Pakistan's government has effectively ended private sector involvement in high-speed diesel (HSD) imports, granting the state-owned Pakistan State Oil (PSO) exclusive rights for the current fiscal year. The move, approved by the federal cabinet, also caps petrol imports by private oil marketing companies (OMCs) based on their past sales, marking a significant shift in the country's fuel supply strategy. Main Developments The Petroleum Division requested the policy change citing 'prevailing market conditions' and a need to 'minimise the impact of rising petroleum prices on consumers.' Under the new guidelines conveyed to the Oil & Gas Regulatory Authority (Ogra), HSD import will be allowed only through PSO for FY27. Private OMCs can still import petrol, but only with Ogra approval through monthly product review meetings (PRMs). Their import allocations are tied to prior market share, with a minimum parcel size of 10,000 tonnes. Defaulters face a nine-month disqualification from further import allocations. Read also: Why Pakistan's bank borrowing surge signals deeper fiscal trouble Pricing mechanism overhaul Ogra will now compute and publish ex-depot prices daily on its official website, without requiring federal government or prime ministerial approval. The pricing formula uses a seven-day rolling average of Platts Arab Gulf assessments for both petrol (MS 92 RON) and HSD (10 ppm sulphur). For import premiums, incidentals, and customs duty, PSO's weighted averages serve as the benchmark. If PSO has not imported petrol in the preceding seven days, a calendar year-to-date average applies. A long-term supply deal with OQ Trading of Oman will set the premium for petrol when no recent PSO import exists—mirroring the existing HSD arrangement with Kuwait Petroleum Company (KPC). Background Ogra previously computed prices and shared them with the Directorate General of Oil, but stopped publishing them more than a decade ago after the government reclaimed price-setting authority for political reasons. The new policy reverses that practice by making daily price publication mandatory on Ogra's website. The government's decision comes amid concerns over supply security, particularly regarding the Strait of Hormuz—a critical chokepoint for global oil shipments. PSO's long-term contract with OQ Trading of Oman is explicitly intended to secure petrol supplies in light of potential disruptions in that region. Historically, Pakistan has used petroleum pricing as a political tool, with governments reluctant to pass on global price increases to consumers. The new daily pricing mechanism removes the need for cabinet-level approval, potentially depoliticizing fuel price adjustments. Why It Matters By centralizing diesel imports under PSO, the government gains tighter control over a fuel that powers the country's transport and agricultural sectors. However, it also eliminates competition that could have kept prices lower and supply chains more resilient. The daily pricing system—applied to both petrol and diesel—introduces greater frequency of price changes, which could help pass through global fluctuations more quickly. Yet it also exposes consumers to more volatile retail prices, as adjustments will occur almost in real time. Petroleum levy rates remain capped by the cabinet, with the Finance Division advising the applicable rates for each fiscal year. This preserves the government's ability to collect revenue from fuel sales without exceeding legislated limits. What's Next Ogra must begin publishing daily ex-depot prices on its website, a practice it abandoned years ago. The regulatory body will also enforce the new import allocation rules for private OMCs, including the nine-month disqualification penalty for defaults. PSO is expected to finalize its long-term supply agreement with OQ Trading of Oman for petrol, while the existing KPC contract for HSD continues. The government will monitor whether the exclusive import regime stabilizes domestic fuel supplies and prices as intended, or whether it creates new vulnerabilities.