Pakistan revises petrol pricing mechanism amid Iran-U.S. tensions

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Pakistan petrol pricing revision

Highlights

Pakistan's Petroleum Division mandates a revised petrol pricing formula based on Pakistan State Oil's actual import cost, following a federal cabinet decision.
Refineries' ex-refinery petrol price will use premiums and duties set at March 7, 2026 pre-war levels for 30 days, with price differentials surrendered under Petroleum Levy C03901.
Petroleum Levy adjustments must be fully passed through to consumers via petrol price reductions, with refineries required to submit daily sales and deposit reports to OGRA and the Petroleum Division.

Cabinet-backed pricing formula for petrol

As reported by Pakistan Business Recorder, the Petroleum Division has written to oil refineries to implement a new petrol pricing formula in line with a federal cabinet decision taken on Friday.

Under the revised mechanism, the import price of petrol may be determined on the basis of the actual import cost of the relevant Pakistan State Oil, or PSO, cargo. If the actual import cost is unavailable for daily pricing, the premium, incidentals and customs duty from the last available cargo may be used to calculate the import price.

The refineries are entitled to an ex-refinery petrol price calculated by fixing the premium, incidentals and customs duty at the levels prevailing on March 7, 2026, described as the pre-war benchmark, for the next 30 days. Any difference between the import price under the new provision and the ex-refinery price under that benchmark is to be surrendered by the refineries under the Petroleum Levy head of account C03901.

Consumer pass-through and refinery compliance

The government says the benefit resulting from the Petroleum Levy adjustment is to be passed on to motor spirit consumers only through a corresponding reduction in petrol prices. This keeps the mechanism focused on retail price relief rather than allowing the differential to remain within the supply chain.

To implement the decision, all refineries have been advised to deposit the differential Petroleum Levy as specified in OGRA price notifications and Petroleum Levy notifications issued from time to time. The refineries are also required to submit daily reports of domestic motor spirit sales, along with CPRs or challans, to the Petroleum Division and OGRA for verification and reconciliation.

In our earlier article on Pakistan’s October 15 fuel price revision, we covered how the government adjusted ex-depot rates by raising petrol and marginally lowering high-speed diesel under its regular pricing mechanism. The update explained that the changes were linked to global market movements affecting Platts rates, premiums, and incidentals, following a cut announced the previous day.

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