Federal Government Approves New Petrol Pricing Formula for Refineries, Freezes Premiums for 30 Days.

ISLAMABAD: The federal government has approved a revised mechanism for determining petrol prices for local oil refineries, introducing a new pricing formula aimed at managing the difference between imported and locally refined petrol prices.
The Petroleum Division’s Directorate General of Oil has formally written to the Oil and Gas Regulatory Authority (OGRA), informing it about the new pricing mechanism and its implementation. According to the letter, the revised formula has received approval from the federal cabinet.
Under the new mechanism, the import price of petrol will be calculated on the basis of the actual cost of Pakistan State Oil’s (PSO) imported cargo. In cases where the actual cost of an imported cargo is not available, the price of the most recently available cargo will be used as the basis for calculation.
The letter further states that oil refineries will be allowed to maintain premiums and other costs at their pre-Iran-US war levels for the next 30 days. The ex-refinery price of petrol will be determined on the basis of the premium and customs duty levels applicable on March 7, 2026.
It also provides that the difference between the imported price of petrol and the refinery price will be transferred to the Petroleum Levy Account. The amount accumulated in these levy accounts will be used to provide relief to consumers on petrol.
According to sources in the Ministry of Energy, local refineries had been charging higher premiums equivalent to those applicable to imported petrol following the Iran-US war. Under the revised arrangement, freezing premiums and customs duty at their March 7, 2026 levels will reduce the ex-refinery price of locally produced petrol, while the imported petrol price will remain comparatively higher.
The sources said that local refineries would be required to deposit an amount equivalent to the difference between the imported petrol price and the refinery price into the levy accounts. This arrangement is intended to channel the price difference towards providing relief to consumers.
Meanwhile, the petroleum levy of Rs80 per litre on petrol will remain unchanged. According to the sources, this existing levy amount will have no connection with the additional relief to be provided to consumers through the new pricing mechanism.
The revised formula is intended to regulate the price difference between imported and locally refined petrol and establish a mechanism through which the resulting amount can be used for consumer relief. Its practical impact will depend on import costs, refinery expenses and the government's implementation of the approved policy.