New pricing formula for refineries may cut petroleum levy by Rs10-15 a litre

ISLAMABAD: The government has begun taking steps to reduce the burden of the petroleum levy on consumers. The Petroleum Division has issued a new pricing formula for oil refineries.

Under the new formula, refineries will also contribute a per-litre share to the petroleum development levy. According to the report, accidental charges on imported cargoes will be fixed at the level before March. The savings from this will be used to reduce the petroleum levy.

According to refinery sources, the move could cut the petroleum levy by Rs10 to Rs15 per litre. However, refineries fear a loss of more than Rs30 per litre.

Under the new formula, the import price of petrol will be set on the cost of PSO’s actual imported cargo. If the actual cost is not available, the premium and additional costs of the last cargo may be used.

For the next 30 days, oil refineries will be able to fix the ex-refinery price of petrol at the level of 7 March 2026. They will also be allowed to keep the premium, additional costs and customs duty at the same level.

According to sources, the difference between the import price and the ex-refinery price will have to be deposited by the refineries under the petroleum levy. The benefit of any change in the levy will be passed on to petrol consumers only.

The Petroleum Division has written to all oil refineries, directing them to provide daily petrol sales details to the Oil and Gas Regulatory Authority (Ogra) and the Petroleum Division. CPRs and challans will also have to be submitted with the sales reports. Ogra and the Petroleum Division will verify payments and accounts of the additional levy.

Meanwhile, refinery sources have called the government’s decision political and announced that they will write a letter seeking its review.