Petroleum Levy Likely to Drop by Rs 10 to 15 Per Litre Following Government’s New Pricing Formula; Refineries Mandated to Contribute to Development Levy Despite Expressing Financial Concerns
ISLAMABAD: The federal government has started to put measures in place to cut down the petroleum levy by Rs 10-15 per litre by implementing a completely new pricing formula, a step which would ease the financial burden on consumers.
The Petroleum Division has now issued the updated pricing and determination formula for oil refineries, the sources said, adding that the refineries will now also pay a specific amount per litre of the Petroleum Development Levy (PDL).
The most significant components of the petroleum division’s new pricing formula for refiners is covered in this article.
Reduction of Petroleum Levy: The new mechanism will involve paying pre-March charges for all cargoes that are shipped in and remove the petroleum levy as a result. Industry sources suggest this will reduce the levy by Rs 10 to 15 per litre, but there are concerns by stakeholders in the refinery industry that it could cost them more than Rs 30 per litre.
Pricing Determination and Benchmarks: The new formula dictates that petrol actual import cost of Pakistan State Oil (PSO) will determine the import price of petrol. When actual figures are not available, the prices and expenses for premium and incidental charges will be taken from the latest cargo. The oil refineries will continue to charge petrol at their ex-refinery prices for the next 30 days, capping premiums, incidentals and custom duties at the ex-refinery rates that prevailed on March 7, 2026.
Levy Differential and Fund Submission: The amount by which the import price is higher than the ex-refinery price should be paid into the petroleum levy pool by the refineries and all financial gains from the levy changes should be passed directly to the petrol consumers.
Reporting and Oversight: The Petroleum Division has sent formal letters to all oil refineries to ask them to send petrol sales reports to OGRA and the Petroleum Division along with Computerized Payment Receipts (CPRs) and bank challans, so that authorities can audit and verify the extra levy payments. In the interim, refinery sources have questioned the policy as being “politically motivated” and vowed to send a formal letter to review the policy.