ISLAMABAD: The Federal Cabinet has revised the refinery-level pricing mechanism for petrol during the Iran-US war, directing all refineries to surrender the difference between the import price and the ex-refinery price to the government under the Petroleum Levy account, with the resulting benefit to be passed on to consumers through a corresponding reduction in petrol prices.
The decision, taken on a summary submitted the same day, is described in the official notification as a “revised pricing mechanism for Motor Spirit (MS) during the Iran-US war times”. The government has directed all refineries to implement the new formula immediately.
The revised mechanism has four key components, covering the determination of petrol’s import price, the price payable to local refineries, recovery of the difference through the Petroleum Levy and transfer of the resulting benefit to consumers.
Under the first component, the import price of petrol will be determined on the basis of the actual import cost of the relevant Pakistan State Oil (PSO) cargo. Where the actual import cost is unavailable for daily pricing, the premium, incidentals and customs duty of the last available cargo will be used to determine the import price.
The second component determines the ex-refinery price payable to local refineries. Under this arrangement, premiums, incidentals and customs duty will be fixed at the levels applicable on March 7, 2026, before the war, for the next 30 days. This means the ex-refinery price will be calculated using pre-war levels of these components.
The third component deals with the difference between the import price and the ex-refinery price. Under the new mechanism, this differential will be surrendered by refineries to the government under the Petroleum Levy head of account C03901.
The fourth component requires the government to pass on the resulting benefit of the Petroleum Levy adjustment to petrol consumers exclusively through a corresponding reduction in the price of Motor Spirit.
The notification also specifies payment and reporting requirements for refineries. They have been directed to deposit the differential Petroleum Levy into account C03901 in accordance with OGRA price notifications and Petroleum Levy notifications issued from time to time.
Refineries must also submit daily reports of their domestic MS sales, along with Computerised Payment Receipts (CPRs) and deposit challans, to the Petroleum Division and the Oil and Gas Regulatory Authority (OGRA) for verification and reconciliation.
The order, numbered PL-3(457)/2026-86 and signed by Financial Analyst Awais Jamil, was addressed to Pak-Arab Refinery Limited, Pakistan Refinery Limited, Attock Refinery Limited, National Refinery Limited, Cnergyico Refinery and ENAR.
The notification does not specify the exact reduction in petrol prices that consumers will receive under the revised mechanism. The actual benefit is expected to become clear through OGRA’s subsequent price notifications.