Petroleum Division revises petrol pricing formula for refineries
The Petroleum Division has told refineries to follow a new petrol pricing formula approved by the Federal Cabinet. Refinery charges are frozen at pre-war levels for 30 days, and any benefit must go to consumers.
For information only, not investment advice. Prices change quickly: check the time and source of every figure.
- Cabinet approved a new petrol pricing mechanism based on actual import cost of PSO cargo.
- Refinery charges are frozen at March 7 levels for 30 days.
- Refineries must pay the difference to the government as petroleum levy.
- The oil industry warned of losses and risks to upgrade investment.
The Petroleum Division has revised the mechanism for pricing petrol and has directed domestic oil refineries to follow a new formula, in line with a decision of the Federal Cabinet. The move comes amid the Iran-US tensions, Business Recorder reported.
Under the arrangement, the import price of petrol will be determined on the basis of the actual landed cost of the relevant Pakistan State Oil (PSO) cargo. Where actual import costs are not available, the premium, incidental charges and customs duty from the most recent PSO cargo will be used.
Daily Pakistan reported that key refinery charges are frozen at pre-war levels for 30 days, and that any financial benefit resulting from the change must be passed on to consumers through lower petrol prices. It said the US-Iran conflict has continued for 8 months and is pressing global oil markets.
The reference date for determining key refinery costs is March 7, 2026. For the next 30 days, refineries must calculate ex-refinery petrol prices using the premium, incidental expenses and customs duty levels of that date.
Refineries must transfer any difference between the PSO-based import price and the ex-refinery price based on March 7 to the government under the Petroleum Levy account. The amount is to be deposited under account head C03901, and all domestic refineries must deposit the differential levy according to OGRA notifications.
Refineries must also submit daily reports on domestic petrol sales, along with supporting CPRs, challans and other payment documents. Minute Mirror reported that the Petroleum Division's Directorate General of Oil informed OGRA of the revised mechanism in an official letter.
Citing Geo News, Daily Pakistan Urdu reported that the formula could cost refineries a loss of about Rs49 per litre. It said a $5 to $6 billion investment planned for refinery upgrades could be at risk. The oil industry warned that the change came only weeks after agreements were signed to modernise older refineries. The report said the cabinet approved the mechanism on October 30.
Why it matters
The formula changes how petrol prices are set at pumps across Pakistan, and reports say any benefit is to be passed on to motorists. The oil industry says refinery upgrade investment could be affected.
