Pakistan Refineries Losses in April: Pakistan’s oil refining sector encountered significant financial challenges as the industry struggled with Rs24 billion in losses. The losses were attributed to government-imposed pricing caps and elevated import costs, which have placed immense pressure on refineries.
The Pakistan refineries controversy centers around the government’s decision to fix the diesel ‘crack spread’ at $41.5 per barrel, a figure industry officials argue is misaligned with actual market conditions. Refinery representatives claim that the true costs of crude, including freight and war risk premiums, are not adequately reflected in this pricing model.
Industry insiders report that the actual crack spread reached approximately $60 per barrel by the end of April, based on Dubai crude prices nearing $110 per barrel and diesel prices around $160 per barrel. Despite this, refineries are compensated on the capped rate, leading to unsustainable financial conditions.
Refinery officials have expressed concerns over the additional 5% customs duty on crude oil imports, which further distorts profitability. They argue that the current pricing mechanism, while aimed at stabilizing domestic fuel prices, leaves refineries with limited financial recovery options.
The financial strain extends beyond diesel, with petrol and furnace oil margins remaining low and negative, respectively. The industry’s woes are compounded by a sales tax exemption, adding to the annual losses of Rs35 billion.
Federal Minister for Petroleum and Natural Resources, Ali Pervaiz Malik, acknowledged the challenges, citing efforts to support refinery upgrades and offset losses. However, industry experts warn that without policy adjustments, the sustainability of Pakistan’s refining sector remains at risk.
Historically, the sector has faced policy inconsistencies, discouraging investment and hindering development. The current financial pressures highlight the critical role of refineries in ensuring national energy security, especially in times of regional geopolitical tensions.
Published in SouthAsianDesk, May 3, 2026
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