Pakistan’s oil refineries say a sudden federal cabinet change to the petrol pricing formula requires them to deposit about Rs49 per litre into the petroleum levy account—more than three times the Rs14.71 per litre cut in that levy—and leaves them selling motor spirit below production cost.
Industry officials argue the decision effectively moves the cost of consumer relief onto domestic refiners. A Petroleum Division letter dated 30 October said the cabinet had approved a revised mechanism under which the premium, incidentals and customs duty used to set the ex-refinery petrol price would be fixed at their 7 March 2026 levels for the next 30 days. Any gap between that revised ex-refinery price and the import price based on Pakistan State Oil’s actual import costs must be surrendered into the petroleum levy account.
How the Rs49 figure is built
Refinery executives said incorporating pre-war premiums and incidentals into motor spirit pricing alone costs them roughly Rs35 per litre. Diverting about Rs14 per litre from customs duty recovery toward reducing the petroleum levy brings the total hit to about Rs49 per litre, they said—well above the Rs14.71 levy reduction the contribution is meant to fund.
Attock Refinery chief executive Adil Khattak called the change a serious setback. Refineries had already agreed twice to cap their spread on high-speed diesel, first at $41.89 and later at $38, he said, and now face another large loss on petrol. He argued that diverting proceeds of the 10% customs duty away from dedicated refinery accounts strikes at the Brownfield Refineries Up-gradation Policy, which earmarks those funds to help finance upgrade projects, and weakens assurances against adverse policy shifts while those projects are under way.
Industry reaction and investment worries
The vice chairman of Cnergyico Pk warned that the intervention could push the company’s gross refining margins into negative territory. He said Cnergyico had been importing higher-priced United States crude that yields more gasoline than the Middle Eastern grades it used before, and that the firm was already not recovering the full diesel crack because of earlier government limits on diesel margins. With a higher gasoline share in the barrel, he said, the new petrol formula is especially damaging.
Industry officials said the cabinet move came without consultation, despite earlier remarks by Federal Minister for Petroleum Ali Pervaiz Malik—made while defending a diesel price cut—that talks with refineries had taken place. Company officials said no such talks preceded this petrol decision. The chief executive of another leading refinery said policies were changing too quickly for a credible regulatory regime and questioned how foreign investors could commit large sums to upgrades if overnight formula changes remain possible. Officials cautioned that abrupt interventions could discourage crude diversification, including US imports, and undermine confidence in multibillion-rupee refinery investment plans.
Timeline: what has happened so far
- Earlier diesel caps: Refineries agreed to limit their high-speed diesel spread first at $41.89 and later at $38.
- 7 March 2026: Levels of premium, incidentals and customs duty used as the fixed reference for the new 30-day ex-refinery petrol formula.
- 30 October 2026 (Friday night): Federal cabinet revises the petrol pricing mechanism; Petroleum Division issues the letter directing the revised formula and levy-account surrender.
Aasan alfaaz mein
Sarkar ne petrol levy mein Rs14.71 kami ki hai, lekin refineries ko lagbhag Rs49 fi litre petroleum levy account mein jama karna hoga. Industry ka kehna hai ke yeh faisla un se mashwara ke baghair hua aur woh petrol cost se sasta bechne par majboor ho sakte hain. Short term mein consumer ko levy kami se faida ho sakta hai, lekin refineries ke margins aur upgrade plans par dabao barh gaya hai. Agay dekhna hoga ke 30 din ke formula ke baad pricing kaise set hoti hai.
