The federal government has introduced a new mechanism for determining petrol prices in Pakistan amid rising tensions between Iran and the United States. The revised formula, approved by the Federal Cabinet, will remain effective for the next 30 days and aims to manage the impact of increasing international fuel costs.
According to reports, the Petroleum Division has issued official instructions to oil refineries to follow the new pricing mechanism. The changes cover petrol import costs, refinery prices and the collection of petroleum levy.
How Will the New Petrol Pricing Formula Work?
Under the revised mechanism, the import price of petrol will be calculated using the actual cost of the relevant Pakistan State Oil (PSO) import cargo.
However, if the actual import cost is not available when daily prices are calculated, the government will allow the use of the premium, additional expenses and customs duty from the last available cargo.
This change is intended to make petrol price calculations reflect actual import costs while providing a specific method for situations where updated cargo information is unavailable.
Petrol Refinery Prices Fixed at March 7 Level
One of the major changes is related to the ex-refinery price of petrol.
For the next 30 days, local oil refineries will be allowed to calculate petrol prices by keeping the premium, additional expenses and customs duty at their March 7, 2026 levels.
The difference between the petrol import price and the revised ex-refinery price will have to be deposited by refineries into the government’s Petroleum Levy account.
The government will pass the financial benefit generated through this adjustment to petrol consumers through a corresponding reduction in petrol prices.
Refineries Must Submit Daily Petrol Sales Reports
The Petroleum Division has also introduced reporting requirements to monitor the new arrangement.
All oil refineries have been directed to submit daily details of their domestic petrol sales to the Petroleum Division and the Oil and Gas Regulatory Authority (OGRA).
These reports must include Computerised Payment Receipts (CPRs) and payment challans. Both authorities will verify the additional petroleum levy payments and reconcile the reported figures.
This monitoring system will help the government check whether refineries are following the revised pricing instructions.
Petrol Import Premium May Increase in November
Another important factor behind the decision is the expected increase in petrol import premiums.
According to the reported estimates, the import premium on petrol cargoes arriving in Pakistan during November could reach $28 to $35 per barrel. The current petrol pricing calculation includes an import premium of $19.88 per barrel.
The new 30-day mechanism is intended to manage the impact of these higher import costs on domestic petrol pricing.
What Does the New Formula Mean for Petrol Consumers?
The revised mechanism does not automatically announce a new petrol price. Instead, it changes how import costs, refinery prices and petroleum levy adjustments will be calculated.
For consumers, the key point is that any benefit generated through the petroleum levy adjustment is intended to be passed on through lower petrol prices.
The actual impact will depend on the applicable pricing calculations and government notifications during the 30-day period.
