The government has shifted the impact of higher petrol import costs to local refineries to prevent an increase in prices for consumers, according to a research note by Topline Research and the latest petroleum price notification effective October 31, 2026.
The increase in the import premium, including freight, from $19.88 per barrel to $25.52 per barrel has raised petrol costs by approximately Rs. 14.71 per litre. Instead of passing the increase on to consumers, the government has reduced the petroleum levy charged directly at the pump from Rs. 80 per litre to Rs. 65.29 per litre, with refineries absorbing the additional cost.
The notification lists the total petrol price at Rs. 377.91 per litre, excluding secondary freight. The price includes the direct petroleum levy of Rs. 65.29 per litre and a climate support levy of Rs. 5 per litre, while petrol remains exempt from sales tax.
How the Levy Adjustment Works
The pricing notification sets the petrol price before the petroleum levy, climate support levy, and sales tax at Rs. 307.62 per litre. The government’s notified petroleum levy is Rs. 80 per litre, but the document separately records a levy adjustment of minus Rs. 14.71 per litre through refineries.
The resulting direct petroleum levy is Rs. 65.29 per litre, which is the amount charged to oil marketing companies. The notification states that the Rs. 14.71 per litre impact, calculated against estimated total countrywide petrol volumes, will be surrendered through refineries at Rs. 49.02 per litre on their sales to oil marketing companies.
Local refineries supply approximately 30 percent of Pakistan’s motor spirit (MS), or petrol. The higher per-litre burden on refinery sales reflects the fact that the cost is being absorbed by a smaller share of the country’s total petrol supply rather than being spread across all sales.
Refineries Could Face Rs. 10–15 Billion Monthly Burden
Topline Research estimates that the arrangement could impose a financial burden of Rs. 10 billion to Rs. 15 billion per month on refineries, assuming annual motor spirit production of 2.6 million tonnes.
The brokerage said the estimate is preliminary and remains subject to further confirmation. It is following up with refineries for additional details and may issue an update if required.
The price notification also shows the other components of petrol pricing, including an ex-refinery or import price of Rs. 282.26 per litre, an Inland Freight Equalization Margin of Rs. 7.51 per litre, an oil marketing company margin of Rs. 7.87 per litre and a dealer margin of Rs. 9.98 per litre. The government’s adjustment is specifically reflected in the petroleum levy, rather than in these listed price components.
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