Pakistan's federal government has changed the way petrol prices are set, directing oil refineries to surrender the difference between the import price and the ex-refinery price as petroleum levy. The government says the resulting benefit will be passed on to consumers only through a corresponding cut in the retail price of petrol.
The Petroleum Division issued notifications to the Oil and Gas Regulatory Authority (OGRA) and the refineries after the federal cabinet approved changes to the petrol pricing formula on October 30, aimed at handling price swings caused by the Iran-US war. Under the new system, the import price will be based on the actual cost of the relevant Pakistan State Oil cargo. For the next 30 days, the ex-refinery price paid to refineries will be calculated with premium, incidentals and customs duty fixed at their pre-war levels of March 7, 2026.
The ex-refinery price is the rate at which a refinery sells fuel to oil marketing companies before taxes, dealer margins and distribution costs are added. Refineries must also submit daily reports of domestic petrol sales, along with payment receipts, to the Petroleum Division and OGRA for verification.
According to sources, the revised formula is meant to stop consumers from bearing the full cost of higher premiums and freight charges claimed by refineries, which could otherwise have pushed petrol prices up sharply. Officials said the prices announced on October 30 were set under the new formula. Petroleum Minister Ali Pervaiz Malik said on Sunday that 12 to 13 million deserving people were receiving subsidised petrol at pre-war prices.