Refineries demand withdrawal of new petrol pricing formula over Rs49.02 per litre levy

ISLAMABAD: All four oil refining companies in the country have demanded that the federal government immediately withdraw the new method of determining the petrol price. They say that under this formula they will have to pay Rs49.02 per litre as petroleum levy.

The heads of Attock Refinery, Cnergyico PK, National Refinery and Pakistan Refinery sent a joint letter to the Minister for Petroleum. It said the move was unilateral and would affect the refineries’ financial capacity and the investment committed under the Brownfield Refining Policy. They have also sought a meeting with the minister this week.

The federal cabinet approved the change in the pricing method on 30 October, and it came into effect on 31 October. Under it, the price of imported petrol is set on the actual cost of the relevant PSO cargo. If the latest cost is not available, the premium, miscellaneous charges and customs duty of the last available cargo are taken. For local refineries, these components have been frozen for 30 days at the level before the war of 7 March 2026. The difference between the import price and the ex-refinery price will be credited to the petroleum levy account.

The refineries’ position is that the war has raised the costs of crude oil purchase, freight, insurance and financing, so the old components do not cover their costs. They say the levy is usually recovered through prices, but the burden has now fallen on the refineries. They said the levy notification is “until further orders”, while the cabinet’s direction is for 30 days.

Citing clauses 7, 8.1 and 22.2 of the upgrade agreement, they said the decision undermined the assurance of policy stability. They said changes to the pricing formula were earlier made after consultation, but this time they were not heard. They demanded an end to the freeze on 7 March prices, restoration of the formula in place before 31 October, and immediate directions to Ogra.

Minister for Petroleum Ali Pervaiz Malik said at a press conference on Monday with Minister for Information Attaullah Tarar that, with the refineries’ cooperation, an increase of about Rs15 per litre expected on Friday was averted. He said about 70 per cent of the country’s petrol requirement is met through imports and 30 per cent by local refineries.