Fresh moves to alter Pakistan's petroleum pricing mechanism have raised concerns in the refining industry, with refinery executives warning that repeated changes to sector economics can undermine investment plans, weaken company cash flows and complicate billions of dollars of upgrades envisaged under the Brownfield Refinery Policy.

Sources privy to the proceedings told Probes Pakistan that the latest proposal involves reducing the High-Speed Diesel (HSD) price cap by up to PKR 8 per barrel. The proposal has caused concern in the refining industry, particularly as the government has already changed or adjusted various elements of the petroleum pricing mechanism seven to eight times over the past four months, industry sources said.

Top executives of several refineries contacted by Probes Pakistan expressed alarm over the development, questioning whether the impact of a lower HSD cap on cash flows, profitability and debt-servicing capacity has been fully assessed. "What is the economic rationale for squeezing refinery margins further at a time when the same refineries are being asked to commit billions of dollars?" a senior industry official questioned.

The latest uncertainty emerges at a critical stage for the implementation of the Brownfield Refinery Policy, which requires existing refineries to undertake major upgrades to modernise plants and produce cleaner petroleum products. Industry officials warned that policy uncertainty can make investors and lenders more cautious about committing funds.