Pakistan changes petrol pricing formula under new federal government policy

ISLAMABAD: The federal government has revised the mechanism used to determine petrol prices in Pakistan introducing a new formula based on the actual cost of imported fuel and adjustments to refinery pricing.

ISLAMABAD: The federal government has revised the mechanism used to determine petrol prices in Pakistan introducing a new formula based on the actual cost of imported fuel and adjustments to refinery pricing.

The Petroleum Division’s Directorate General of Oil has informed the Oil and Gas Regulatory Authority (OGRA) about the revised pricing mechanism through an official letter. According to the communication the new formula has already received approval from the federal cabinet.

Under the revised arrangement the import price of petrol will be calculated using the actual cost of cargo imported by Pakistan State Oil (PSO). If the cost of the latest imported shipment is not available authorities will use the price of the most recently available cargo as the reference.

The government has also introduced temporary arrangements for local oil refineries. According to the letter refineries will be allowed to maintain premiums and other related costs at pre-Iran-US conflict levels for the next 30 days.

For this purpose the ex-refinery price of petrol will be calculated using the premium and customs duty levels applicable on March 7, 2026.

The revised mechanism also outlines how the difference between imported petrol prices and refinery prices will be handled.

According to the Petroleum Division’s instructions this price difference will be transferred to the petroleum levy account. The funds accumulated in these accounts will subsequently be used to provide relief on petrol prices.

The new arrangement is aimed at changing the way petrol costs are calculated and managing the financial difference between imported fuel and locally refined products.

The letter to OGRA sets out the revised pricing instructions including the reference prices for imported cargo the temporary treatment of refinery costs and the use of petroleum levy funds for consumer relief.

The development comes as the government introduces changes to the country’s fuel pricing framework. However the announcement does not specify the exact impact of the revised formula on the next petrol price announcement.