What the cabinet decided on 30 October
Pakistan’s federal cabinet has approved a revised petrol pricing mechanism Pakistan consumers and industry alike will feel within weeks. On the night of Friday, 30 October 2026, the cabinet directed domestic oil refineries to deposit Rs49 a litre into the petroleum levy account — to offset a cut of Rs14.71 a litre in the petroleum levy itself, The Express Tribune reported on 1 November.
The instruction runs through a Petroleum Division letter issued on 30 October. The mechanism is designed to run for 30 days, though the letter’s full text has not been published, and it is not yet known whether the 30-day window began with the cabinet decision or with a later price notification.
For context, the 30 October price publication still carried the full Rs80 petroleum levy and a Rs5 climate support levy on petrol, with pump prices unchanged at Rs377.91 a litre for petrol and Rs402.96 for high-speed diesel through 2 November.
How the new petrol pricing formula works
Under the revised formula, the import price of petrol will be determined on the basis of Pakistan State Oil’s actual import costs, following the federal cabinet’s decision. That is a departure from the benchmark-linked pricing the industry has been operating under.
A refinery’s ex-refinery petrol price, meanwhile, will be calculated by fixing the premium, incidentals and customs duty at their 7 March 2026 levels — described in reporting as a pre-war benchmark — for the next 30 days. The difference between the import price based on PSO’s actual costs and that revised ex-refinery price must then be surrendered into the petroleum levy account.
The government says the benefit of the petroleum levy adjustment is to be passed on to motor spirit consumers only through a corresponding reduction in petrol prices. Refineries will also be required to submit daily sales and deposit reports to OGRA and the Petroleum Division, according to reporting on the cabinet’s instructions.
Why refineries say the maths is lopsided
The arithmetic, as the industry sees it, does not add up. The levy falls by Rs14.71 a litre; the industry puts its own contribution at roughly Rs49 a litre — more than three times the relief. Those figures are the refiners’ own published calculations, not official regulator numbers.
Attock Refinery chief executive Adil Khattak gave the breakdown behind the Rs49 figure. He said incorporating pre-war premiums and incidentals into motor spirit pricing would cost refineries about Rs35 a litre, with a further Rs14 a litre coming from diverting part of their customs duty recovery towards reducing the petroleum levy. Together, that makes the Rs49 a litre.
Khattak tied the second half of that sum to a promise he says the industry was given. The Brownfield Refineries Up-gradation Policy requires the proceeds of a 10 per cent customs duty to be deposited into dedicated refinery accounts to finance upgrade projects. “This decision strikes at the very foundation of the Brownfield Refineries Up-gradation Policy,” he said, arguing that diverting the money “defeats the objective of this provision” and undermines the policy’s assurance of protection against adverse changes during a project’s execution.
“Margins can go into negative territory”
Cnergyico, which processes higher-priced crude imported from the United States, says it is more exposed than most. Its vice chairman said the company runs US crude that yields more gasoline than the Middle Eastern grades Pakistani refineries traditionally process. “With this change in the pricing formula, our gross refining margins can go into negative territory,” he said, adding that the company was already not recovering its actual diesel crack because of the government’s intervention there.
Khattak said the industry had already twice agreed to cap its spread on high-speed diesel — first at $41.89 and later at $38 — and called the new petrol formula “yet another serious loss”. Another refinery chief executive attacked the pace of the change itself: “Nowhere in the world do policies change this quickly. The regulatory regime has become a joke and then the government expects foreign direct investment to flow into the country,” he said.
Industry officials warned that abrupt interventions could discourage crude diversification, including imports from the United States, at a time when Pakistan is courting American energy investment.
The consultation dispute and what happens next
There is also a factual dispute about whether the industry was consulted. Petroleum Minister Ali Pervaiz Malik had said, while defending an earlier diesel price reduction, that the government had held talks with refineries. Company officials told The Express Tribune that no such consultation preceded the petrol decision.
The industry’s case is complicated by its recent profits. Nikkei Asia reported on 1 November that Pakistan’s major refineries recorded a nearly twentyfold surge in combined profit in the quarter through September, helped by rising refining margins during global energy disruptions. Those margins were earned on crude bought and products sold between July and September, before the new 30-day formula — but the windfall weakens the claim that refineries cannot carry any of the cost.
Much remains uncertain: the notified text is unpublished, the exact start of the 30-day window is unknown, and the Rs14.71 levy cut will only reach consumers if the next price notification passes it through — petrol was still being published at Rs377.91 with the full levy on 30 October. Whether refineries absorb the contribution, recover it through other product prices, delay crude purchases, or challenge the mechanism, none has yet said.
Sources: KhabarWire, TradersUnion; also see our coverage of the current petrol and diesel prices and refinery margin pressures after the Saudi refinery attack.
Related Posts
BusinessFBR Faces Rs129 Billion Tax Shortfall as Retailers Shun Fixed Tax Scheme
BusinessAurangzeb Backs Digital Assets for Growth: Pakistan Reviews Eurobond Tokenization
BusinessPakistan-Bound LNG Carrier Attacked Near Strait of Hormuz: Al Mayeda Struck, Forced to Turn Back
BusinessGold Price in Pakistan Crashes Rs10,800 Per Tola in Sharpest Drop of the Year
BusinessMaryam Nawaz Launches Punjab PIVOT Economic Plan: Rs2 Trillion Investment Push for Exports and Jobs
BusinessABHI Microfinance Bank Plans Rs3 Billion IPO on PSX — Book Building on 5–6 NovemberMost Popular
How-ToPTA Tax Calculator 2026: Check Mobile Tax on Any Phone381 views
SportsUEFA Champions League 2026-27: Format, Teams and Schedule369 views
Pakistan NewsPIA Boeing 787 Lease Deal: What It Means for the Airline361 views
Canada JobsTech Jobs in Canada: Roles, Salaries, and Skills Needed348 views
SportsBallon d’Or 2026: London Ceremony, Nominees and All-Time Records Ahead of 70th Anniversary334 views
ShowbizWomen’s Fashion in Pakistan 2026: Trends, Brands and Style Guide325 views
