Oil Companies Seek Review Of Rs2.82bn Freight Charges

The Oil Companies Advisory Council (OCAC) has asked the Petroleum Division of the Ministry of Energy to fast-track a long-delayed review of Special Freight Areas (SFAs), through which consumers are currently paying around Rs2.82 billion annually in freight costs via the Inland Freight Equalisation Margin (IFEM).

In a letter addressed to the Director General Oil at the Petroleum Division, the council pointed out that upgrades to Pakistan’s road infrastructure have changed transportation routes and could have lowered the actual freight expenses being recovered from consumers through IFEM.

The OCAC noted that the distances currently used for determining SFA freight may no longer accurately represent existing road networks, travel routes and transportation conditions. According to the council, the last comprehensive assessment of these areas was carried out nearly 30 years ago.

The council urged the ministry to arrange the appointment of an independent consultant as soon as possible to conduct a detailed reassessment of the designated areas.

Data attached to the OCAC’s letter showed that total SFA freight costs for High Speed Diesel (HSD) and Motor Spirit reached Rs2.826 billion between July 2025 and June 2026, covering 422 retail outlets.

Of this amount, approximately Rs1.444 billion represented freight costs associated with HSD, while around Rs1.382 billion related to Motor Spirit.

The figures covered SFA locations supplied from Shikarpur, Quetta, Mehmood Kot, Chakpirana, Faqirabad, Sihala, Juglot and Chitral.

The OCAC said it has repeatedly highlighted the issue with the Oil and Gas Regulatory Authority (OGRA) and the petroleum ministry since 2023.

According to the council, OGRA prepared terms of reference for hiring an independent consultant and published an advertisement on March 28, 2025, seeking a road survey covering primary and secondary freight areas.

However, the proposed survey and reassessment have still not been carried out.

The council argued that the distances and methodology used to calculate SFA freight should be reviewed at regular intervals to ensure the costs ultimately paid by consumers remain reasonable and accurately reflect current transportation conditions.

It said a timely, impartial reassessment would strengthen transparency and efficiency in the IFEM system while helping prevent unnecessary freight expenses from being transferred to consumers.

The OCAC has called on the Petroleum Division to intervene on a priority basis and accelerate the long-delayed reassessment process.