OMCs have no role in fuel pricing: Cnergyico

June 30, 2026 (MLN): Oil marketing companies and refineries have zero flexibility to adjust fuel prices based on their actual operational costs, as the entire pricing structure remains heavily regulated and dictated by the government, said Usama Qureshi, Vice Chairman of Cnergyico Pk Limited, in a recent television interview.

He pointed out a lack of symmetry in how the pricing formula is applied: when global prices fall, the government cuts domestic rates immediately at the next review to gain political capital, but when global prices rise, the increase is delayed or avoided to shield itself from public backlash.

This delay forces the oil industry to absorb the difference, severely damaging cash flow.

Qureshi said the government's mandatory buffer stock requirement compounds the problem, as companies purchase this fuel at prevailing global market rates.

When the government abruptly slashes pump prices, firms are forced to sell their existing, costlier inventory at the new lower regulated rate, with no protection or compensation built into the current mechanism for such inventory losses.

He also flagged the distorting impact of smuggled fuel entering the country and being sold outside the official network.

Since this fuel evades regulated taxes and margins, it undercuts the formal, tax-paying oil sector and shrinks its market share, making survival harder for legal companies operating under strict price controls.

Clarifying a common misconception, Qureshi said fuel prices are not set or inflated by individual OMCs or refineries but are strictly determined by the government's regulated pricing mechanism.

He concluded that the current formula is broken and called for complete deregulation, allowing prices to move based on actual market demand and international costs rather than political considerations, alongside a consistent and symmetrical policy framework for both price increases and decreases.

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