Petrol Pricing Revised to Pass Savings to Drivers
Petrol pricing revised by the federal government will now direct refineries to surrender the gap between import and ex-refinery prices as petroleum levy, with the resulting benefit passed on to consumers through a matching cut in retail prices. The Petroleum Division issued separate notifications to the Oil and Gas Regulatory Authority (OGRA) and to oil refineries after the federal cabinet approved changes to the motor spirit pricing mechanism on October 30.
The change is designed to deal with price movements during the continued Iran-US war. It sets out, in writing, how the import price is fixed, how the refinery price is capped, and where the difference between the two must go.
Petrol pricing revised: how the new system works
Under the revised arrangement, petrol’s import price will be set on the basis of the actual import cost of the relevant Pakistan State Oil (PSO) cargo. If the actual import cost is not available for a given day’s pricing, the premium, incidentals and customs duty of the last available cargo may be used instead.
For the next 30 days, refineries will receive an ex-refinery price calculated by fixing the premium, incidentals and customs duty at the levels that applied on March 7, 2026, before the war. The ex-refinery price is the rate at which a refinery sells petrol to oil marketing companies, before government taxes, duties, dealer commissions and distribution costs are added.
The difference between the import price and the ex-refinery price must then be surrendered by refineries under the petroleum levy head of account C03901. The resulting benefit will be passed to petrol consumers only, through a matching reduction in the retail price.
To enforce the system, the Petroleum Division has directed all refineries to deposit the differential amounts in line with OGRA price and petroleum levy notifications issued from time to time. Refineries must also submit daily reports of domestic petrol sales, along with computerised payment receipts and challans, to the Petroleum Division and OGRA for checking and reconciliation.
OGRA has also directed refineries to deposit adjustments above Rs49 under the revised mechanism. Officials said the prices announced on October 30 were set under the new formula, and that the formula helped avert a major increase at the pump.
Why the government changed the formula
Sources said the revised formula is meant to stop consumers from bearing the full impact of higher premiums and freight charges claimed by refineries. Passing those extra costs straight to consumers could have produced a large rise in petrol prices.
Feature Pakistan reported the first step in this plan when the Petroleum Division froze the ex-refinery price for 30 days in an October 30 letter. The new notifications add the missing detail: cabinet approval, the levy account where the gap must be deposited, and the daily reporting duty that lets officials check the figures.
The October 30 prices themselves show the context. Petrol stood at Rs377.91 a litre for October 29, and the government has since moved to daily price revisions as global oil costs swing. Fuel costs also feed into household budgets in other ways, as seen when LPG prices fell as Iranian supply resumed briefly.
Minister defends targeted help for deserving drivers
What to watch next
What changed in petrol pricing?
The cabinet approved a revised motor spirit pricing mechanism on October 30, under which refineries surrender the gap between import and ex-refinery prices as petroleum levy for the benefit of consumers.
What is the ex-refinery price?
It is the rate at which a refinery sells petrol to oil marketing companies, before taxes, duties, dealer commissions and distribution costs are added.
Where does the price gap go?
Refineries must deposit the difference between the import price and the ex-refinery price under petroleum levy head of account C03901, and the benefit must reach consumers through a matching retail price cut.
Who gets subsidised petrol?
Petroleum Minister Ali Pervaiz Malik said more than 12 to 13 million deserving people receive subsidised petrol at pre-war prices under targeted, technology backed assistance.
How long does the refinery price freeze last?
The ex-refinery price stays fixed at March 7, 2026 levels for premium, incidentals and customs duty for the next 30 days.
