The federal government has introduced a new method for determining petrol prices for local oil refineries in the context of Iran-US tensions. Under the new formula, the price of imported petrol will be linked to the actual import costs of Pakistan State Oil (PSO), while some costs for local refineries will be maintained at the level of March 7, 2026 for 30 days.
This decision was approved by the federal cabinet on October 30, after which the Petroleum Division has issued instructions to refineries to implement the new method.
As per the new procedure, the import price of petrol will be determined on the basis of the actual import cost of the relevant PSO cargo. If the actual cost is not available at the time of daily pricing, the premium, additional costs and customs duty of the last available import cargo will be taken as the basis.
On the other hand, the premium, additional costs and customs duty in the ex-refinery price of petrol for local refineries will remain fixed at the level of March 7, 2026. This restriction will be for an initial period of 30 days.
As per the instructions of the Petroleum Division, the difference arising between the import price and the local refinery price will be deposited in the designated government account of Petroleum Levy.
This amount will be used to provide relief to consumers through the Petroleum Levy. The government has clarified that the financial benefit obtained from this procedure will be passed on to the consumers only through an appropriate reduction in the price of petrol.
All refineries will have to submit relevant payment records and daily sales details of local petrol to the Petroleum Division and the Oil and Gas Regulatory Authority (OGRA). For this purpose, it will be necessary to submit computerised payment receipts and bank challans.
According to Ministry of Energy sources, after the Iran-US tensions, local refineries were adding heavy premiums and other costs to petrol prices equal to imported petrol.
Under the new formula, capping these costs at the March 7 level will create a difference between the ex-refinery price of local refineries and the imported price.
However, this decision does not mean that petrol prices have come down immediately. The price of petrol remained at Rs 377.91 per liter in the effective rates of OGRA from October 31. Therefore, the real relief to consumers will depend on the future price determination and adjustment in the levy.
