Petrol Formula May Cost Refineries Rs49/L

This report is based on a source report.

Pakistan’s latest petrol pricing move may help the government avoid a sharper jump in pump prices, but oil refineries say the cost is being pushed onto them instead. According to source reports at https://tribune.com.pk/story/2637979/refineries-to-sell-petrol-below-cost and https://propakistani.pk/2026/11/01/govt-moves-to-lower-petrol-prices-refinery-price-cap, the revised formula could require refineries to surrender around Rs49 per litre, a figure industry officials say may hurt margins and delay upgrades. For background, read our earlier coverage: Pakistan Fuel Prices February 2026: Petrol Drops Slightly, Diesel Rises Sharply.

The change came after a federal cabinet decision altered how the ex-refinery price of motor spirit is worked out. Under the new setup, the petroleum levy on petrol has been cut by Rs14.71 per litre. At the same time, refineries are being told to deposit the difference between the import-linked petrol price and the revised ex-refinery price into the petroleum levy account.

A Petroleum Division letter dated October 30 reportedly says petrol premiums, incidentals, and customs duty will stay at March 7, 2026 levels for 30 days. That temporary freeze appears to be the key step that lets the government reduce pressure on retail prices for now.

But refineries say the burden is much larger than the levy cut itself. Industry estimates suggest about Rs35 per litre comes from the revised treatment of premiums and incidentals, while another Rs14 per litre is tied to customs duty recovery being shifted to the levy account. Together, that adds up to the roughly Rs49 per litre burden cited in the reports.

For refiners, the big worry is simple: if the selling price falls below production cost, margins can turn negative. One report says refinery officials believe the policy was changed without proper consultation, and they see it as a sudden shift in the rules after earlier talks on fuel pricing.

There is also a wider industry concern beyond this month’s fuel bill. Under the Brownfield Refineries Upgradation Policy, customs duty revenue was supposed to go into dedicated refinery accounts to support major upgrade projects. Refineries now fear that redirecting this money could weaken the economics of those plans and slow work on cleaner, better-quality fuel production.

For motorists, the main impact is short term. The government seems to be using this formula to stop an immediate petrol price shock. But that does not mean the cost pressure has disappeared. It has just moved further up the supply chain.

Drivers should wait for the next official petrol price notification before changing their fuel plans. There is no need to panic-buy petrol or rush into a vehicle decision based only on this policy dispute. Budget-focused motorists can still save money through careful driving and by watching official updates closely. Fleet owners should also build in possible price swings rather than assume the new formula means a lasting discount.

If the 30-day arrangement is extended, the policy could shape both retail prices and refinery profits for longer. If not, the government may need to explain how it plans to balance consumer relief with refinery health and future fuel upgrades. For readers following the wider fuel cycle, see our earlier coverage of Pakistan fuel price changes in July 2026.

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