Pakistan's Refineries Urge Government to Withdraw Rs 49 Per Litre Petrol Levy Differential

Pakistan's four largest refineries have jointly asked the federal government to withdraw a revised motor spirit pricing mechanism, warning that a Rs 49.02 per litre levy differential is squeezing the economics of domestic fuel production and putting planned modernization at risk.

In a joint letter to the petroleum minister, Attock Refinery Limited, Cnergyico PK Limited, National Refinery Limited and Pakistan Refinery Limited challenged the changes introduced on October 31, 2026. Under the new formula, imported petrol is priced using actual or the latest available Pakistan State Oil cargo costs, while premiums, incidental expenses and customs duty components for local refineries stay frozen at March 7, 2026 levels.

The refineries say they must surrender the resulting Rs 49.02 per litre difference as petroleum levy without any corresponding adjustment to their ex-refinery prices. They argue the formula ignores rising crude procurement, freight, insurance and financing costs, potentially making domestic petrol production financially unviable and disrupting supplies.

The companies contend the decision conflicts with commitments made under the Brownfield Refining Policy and their government upgrade agreements. They cite Clause 7, which protects fiscal incentives and implementation timelines during modernization projects, Clause 8.1, which provides an incremental deemed duty incentive on motor spirit, and Clause 22.2, which requires contractual amendments to be made in writing and signed by all parties.

The refineries also complained that, unlike previous pricing changes, the latest decision was taken without industry consultation. They pointed to a discrepancy between the cabinet's direction to retain pre-war pricing components for 30 days and the petroleum levy notification, which remains in effect until further orders, creating uncertainty for investors and potentially disrupting modernization programs.

While reaffirming their commitment to consumer protection, reliable fuel supplies and timely upgrades, the refineries argued that consumer relief should not come entirely at their expense. They have requested withdrawal of the March 7 pricing freeze and the levy differential, restoration of the formula in place before October 31, and corrective action by the Oil and Gas Regulatory Authority, along with an urgent meeting with the petroleum minister this week. Pakistan Arab Refinery Limited is expected to approach the government separately on the same issue, according to sources.