Government Lowers Petrol Levy And Shifts Import Costs To Local Refiner

Government Lowers Petrol Levy And Shifts Import Costs To Local Refineries

Authorities lowered the direct petroleum levy and required local refineries to absorb higher import costs to keep consumer petrol prices steady, according to a recent notification.

NationPulse Desk

Oct 31, 2026 · 2:28 PM 2 min read

Key takeaways

The government reduced the petroleum levy from Rs. 80 per litre to Rs. 65.29 per litre effective October 31, 2026.

Import premiums and freight increased from $19.88 per barrel to $25.52 per barrel, adding Rs. 14.71 per litre to costs.

Local refineries supply about 30 percent of Pakistan's motor spirit.

Topline Research estimates refineries could face a monthly burden of Rs. 10 billion to Rs. 15 billion.

Authorities shifted the burden of rising petrol import costs onto domestic refineries to avoid raising pump prices for the public, based on a petroleum price notification taking effect on October 31, 2026, and analysis from Topline Research.

An increase in the import premium and freight costs from $19.88 per barrel up to $25.52 per barrel added roughly Rs. 14.71 per litre to petrol expenses. Rather than transferring this jump to buyers, authorities lowered the direct pump levy from Rs. 80 per litre down to Rs. 65.29 per litre, forcing refineries to shoulder the extra expense.

Total petrol pricing sits at Rs. 377.91 per litre, leaving out secondary freight. This figure encompasses the direct petroleum levy of Rs. 65.29 per litre alongside a climate support levy of Rs. 5 per litre, while sales tax on petrol stays at zero.

How the Levy Adjustment Works

Pricing documents place the pre-tax and pre-levy petrol cost at Rs. 307.62 per litre. While the official petroleum levy is set at Rs. 80 per litre, the paperwork notes a levy adjustment of minus Rs. 14.71 per litre handled via refineries.

This brings the direct petroleum levy to Rs. 65.29 per litre, billed directly to oil marketing companies. The directive explains that the Rs. 14.71 per litre effect, measured against projected national petrol volumes, will be paid through refineries at Rs. 49.02 per litre when they sell to oil marketing companies.

Domestic refineries produce roughly 30 percent of the motor spirit, or petrol, used in Pakistan. The heavier per-litre charge on refinery transactions happens because the expense falls on a smaller portion of the overall national petrol supply instead of distributing across all volume.

Refineries Could Face Rs. 10-15 Billion Monthly Burden

Topline Research calculates that this setup may cost refineries between Rs. 10 billion and Rs. 15 billion every month, factoring in a yearly motor spirit output of 2.6 million tonnes.

The brokerage noted that these figures are early estimates needing further verification, adding that it is contacting refineries for more information and might publish an update later.

The price notification also details additional elements of petrol pricing, featuring 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. State adjustments appear specifically within the petroleum levy rather than these listed items.

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