Refineries Push Govt to Reverse Rs. 49 Petrol Levy Differential

Pakistan's four major refineries have jointly pressed the administration to immediately withdraw the revised motor spirit (MS) pricing mechanism, warning that the new formula threatens their financial viability and could derail billions of rupees in planned modernization.

Key points

• They cited Clause 7, which protects fiscal incentives and implementation timelines during modernization projects, Clause 8.1.
• The refineries cautioned that the squeeze could jeopardize investments committed under the Brownfield Refining Policy.
• 49.02 per liter difference as petroleum levy without receiving corresponding adjustments to their ex refinery rates.
• The firms additionally argue that the decision contradicts commitments under the Brownfield Refining Policy and their administration upgrade agreements.
• The firms highlighted a discrepancy between the cabinet's direction to retain prewar pricing components for 30 days and the petroleum levy notification.

In a joint letter to the federal petroleum minister, Attock Refinery Limited, Cnergyico PK Limited, National Refinery Limited and Pakistan Refinery Limited challenged the changes introduced on October 31, 2026, pointing to a Rs49.02 per litre levy differential they say undermines the economics of domestic refining.

Meanwhile, the refineries cautioned that the squeeze could jeopardize investments committed under the Brownfield Refining Policy. It was designed to upgrade the country's ageing refining infrastructure. They called on the administration to reverse the revised mechanism without delay.

While premiums, incidental expenses, and customs duty components for local refineries remain frozen at March 7, 2026, levels, under the revised formula, imported petrol is priced using actual or the latest available Pakistan State Oil (PSO) cargo costs. Govt Adopts New Formula to Reduce Petrol Rates.

Refineries must surrender the resulting Rs. 49.02 per liter difference as petroleum levy without receiving corresponding adjustments to their ex refinery rates. They argue that the formula ignores rising crude procurement, freight, insurance, financing, and other costs against the backdrop of the ongoing Iran US war, potentially making domestic petrol production financially unviable and disrupting supplies. Brownfield Policy Commitments and Investment Reservations.

Notably, the firms additionally argue that the decision contradicts commitments under the Brownfield Refining Policy and their administration upgrade agreements.

They cited Clause 7, which protects fiscal incentives and implementation timelines during modernization projects, Clause 8.1. It provides an incremental deemed duty incentive on motor spirit, and Clause 22.2, which requires contractual amendments to be created in writing and signed by all parties. Govt Cuts Petrol Levy, Makes Refineries Pay to Keep Rates Unchanged.

For context, the refineries cautioned that surrendering the differential would erode anticipated returns and threaten planned upgrades. They additionally complained that, unlike previous pricing changes, the latest decision was introduced without industry consultation. Refineries Seek Immediate Administration Intervention.

Meanwhile, the firms highlighted a discrepancy between the cabinet's direction to retain prewar pricing components for 30 days and the petroleum levy notification. It remains effective until further orders. They remarked the open concluded notification creates investor uncertainty and could disrupt 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 levy differential, restoration of the pricing formula in place before October 31, and corrective action by the Oil and Gas Regulatory Authority (OGRA).

They have additionally sought an urgent gathering with the petroleum minister during the current week. As sources indicate, meanwhile, Pakistan Arab Refinery Limited (PARCO) is projected to approach the administration separately over the revised pricing mechanism. Stay Connected with ProPakistani.

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For now, refineries Push Govt to Reverse Rs. 49 Petrol Levy Differential remains the part of the story worth watching, and further updates are likely as more details are confirmed.