Pakistan’s revised petrol pricing forces refineries to surrender war-time premium, giving consumers Rs14.71 a litre relief
The federal government has revised the petrol pricing mechanism so refineries must surrender the difference between import and ex-refinery prices under the petroleum levy, a move officials say translates into relief of Rs14.71 per litre for petrol consumers.
Petrol consumers in Pakistan have begun receiving relief of Rs14.71 per litre after the federal government directed oil refineries to surrender the extra war-time premium they had been charging on locally produced fuel, under a revised pricing mechanism approved by the federal cabinet on October 30.
Under the new arrangement, reported by The Express Tribune and The Nation on Monday, the import price of petrol will be determined on the basis of the actual import cost of the relevant Pakistan State Oil cargo. For the next 30 days, refineries will be entitled to an ex-refinery price calculated by fixing the premium, incidental charges and customs duty at the levels that applied on March 7, 2026, before the Iran-US war began.
The difference between the import price and that capped ex-refinery price must be surrendered by refineries under the petroleum levy head of account, known as C03901, with the resulting benefit passed on to petrol consumers exclusively through a corresponding reduction in the retail price. The Petroleum Division has issued notifications to the Oil and Gas Regulatory Authority and to all refineries to give effect to the change.
The scale of the adjustment is set out in a letter from OGRA to the Petroleum Division, cited in the reporting. It says refineries shall surrender Rs49.02 per litre, representing the differential between the notified import price and the entitled ex-refinery price calculated on pre-war premium, duty and incidental levels — an amount that translates into a contribution equivalent to Rs14.71 per litre towards the overall petroleum levy of Rs80 per litre, calculated on countrywide volumes.
The change addresses a windfall that had built up since the war began. Until October 30, OGRA calculated petrol prices on an import-parity basis, allowing local refineries to apply the PSO premium to locally produced petrol as well — meaning fuel refined in Karachi or Rawalpindi from crude oil was priced as if a ship had brought it from the Gulf. When the Iran-US war pushed the PSO premium to 25.52 US dollars per barrel as of October 30, local refineries automatically received that elevated price without bearing any extra cost.
The revised mechanism caps that premium at its March 7 level and takes the difference as petroleum levy instead. The Petroleum Division has also incorporated a premium differential benefit of 2.950 US dollars per barrel per day into petrol pricing to help smooth price movements, and the existing petroleum levy of Rs80 per litre remains unchanged and separate from the new adjustment.
The six refineries covered by the direction are Pak-Arab Refinery Limited, Pakistan Refinery Limited, Attock Refinery Limited, National Refinery Limited, Cnergyico Refinery Limited and ENAR. They have been advised to deposit the differential levy as specified in the OGRA price and levy notifications issued from time to time, and to furnish daily reports of domestic petrol sales along with computerised payment receipts and challans to the Petroleum Division and OGRA for verification and reconciliation.
Officials said the prices announced on October 30 were determined under the new formula, which they said had helped avert a major increase. Under those prices, petrol remains unchanged at Rs377.91 per litre, while high-speed diesel rose by Rs2.29 to Rs402.96 per litre, with the rates effective from October 31 to November 2 under the government’s new daily fuel pricing framework.
The daily framework itself marks a shift in how Pakistan sets fuel prices. Instead of fortnightly revisions, OGRA now calculates and publishes ex-depot prices for petrol and diesel based on the average international prices of the previous seven days, with the stated aim of passing changes in international oil prices to consumers more quickly.
What happens next will test whether the relief reaches motorists in full. The mechanism runs for 30 days, during which refineries must deposit the differential and report daily sales; OGRA and the Petroleum Division will reconcile those deposits against actual volumes. The next price revision will show whether the capped premium holds as war-related volatility continues, and whether the promised reduction is reflected at pumps across the country rather than absorbed elsewhere in the supply chain.
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