ISLAMABAD (Daily Pakistan) – US-Iran conflict has continued for 8 months, pressing global oil markets, and now Pakistan has moved to bring relief to motorists struggling with high fuel costs.
Sharid led government now freezes key refinery charges at pre-war levels for 30 days and directing that any resulting financial benefit be passed directly to consumers through lower petrol prices, bringing a temporary mechanism that could provide relief to millions of motorists while placing oil refineries under tighter financial scrutiny.
With new changes, the government tweaks the way petrol prices are calculated, linking import costs to actual shipments brought into the country by Pakistan State Oil (PSO), while freezing key components of refinery pricing at pre-war levels for a month period. The move follows a Federal Cabinet decision, with the Petroleum Division issuing formal instructions to domestic refineries to immediately align their pricing calculations with the revised framework.
Any financial benefit generated through the pricing adjustment must reach petrol consumers through lower pump prices rather than remain with oil refineries. With the international energy market facing uncertainty, Islamabad has moved to establish a revised mechanism for determining the cost of petrol imported into Pakistan.
Under the cabinet-approved arrangement, the import price of petrol will be calculated using the actual landed cost of the relevant PSO shipment. However, because actual import costs may not always be available when daily price calculations are required, the government has introduced an alternative method.
In such cases, the premium, incidental charges and customs duty from the most recently available PSO cargo will be used to calculate the import price. The arrangement is intended to provide a consistent basis for price determination despite fluctuations in international petroleum markets.
One of key changes concerns amount oil refineries will be allowed to charge for petrol. Instead of allowing all pricing components to fluctuate with current import conditions, the government has established March 7, 2026, as the reference date for determining key refinery costs.
For the next 30 days, oil refineries will be required to calculate their ex-refinery petrol prices using the premium, incidental expenses and customs duty levels applicable on that date. The government picks pre-war benchmark as part of its temporary pricing arrangement, creating a difference between the actual import-cost calculation and the amount refineries are entitled to receive.
The revised mechanism includes a provision specifically designed to pass financial benefits to consumers. Any difference between the import price calculated under the PSO cargo-based formula and the ex-refinery price determined using the March 7 benchmark must be transferred by refineries to the government under the Petroleum Levy account.
The amount will be deposited under account head C03901, ensuring that the difference is formally recorded and accounted for. The government has explicitly instructed that any resulting benefit from the petroleum levy adjustment be passed on exclusively to petrol consumers through an equivalent reduction in the selling price of motor spirit.
The government has also introduced additional compliance measures to monitor implementation of the new pricing system. All domestic refineries have been directed to deposit the differential petroleum levy according to applicable notifications issued by the OGRA. In addition, refineries must submit daily reports detailing their domestic petrol sales.
These submissions must include supporting Computerised Payment Receipts (CPRs), challans and other relevant payment documentation, allowing the Petroleum Division and OGRA to verify collections and reconcile payments. The reporting requirements are intended to ensure that the pricing differences are properly accounted for and that refineries comply with the revised levy mechanism.
By separating actual PSO import costs from the benchmark used to determine refinery entitlements, the government created mechanism through which certain pricing differences can be redirected into the petroleum levy system and potentially used to reduce consumer prices.
The arrangement will apply for 30 days, making its effectiveness dependent on the difference between actual import costs, the frozen refinery pricing components and the amounts reflected in OGRA’s price notifications.
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