ISLAMABAD: Refineries petrol below cost levy November 2026 has become the centre of a row between the government and the oil refining industry, after the federal cabinet told refineries to deposit Rs49 a litre into the petroleum levy account. The refineries say the decision forces them to sell petrol below their production cost, and they complain that the pricing mechanism was changed without any consultation with the industry. The dispute comes at a time when fuel prices affect every household, every transporter and every factory in the country.
The cabinet took the decision on the night of Friday, 30 October, and it was communicated through a Petroleum Division letter October 30 to the chief executives of the refineries. The cabinet directed that a reduction of Rs14.71 per litre in the petroleum levy would be offset by a contribution of Rs49 per litre from the refineries to the oil levy account. The levy itself was cut by Rs14.71 per litre, yet the industry says it must now pay more than three times that relief into the levy account, which is why the arithmetic has become the heart of the argument.
The new mechanism works by fixing the price that refineries can recover, and by taking the difference away from them. Under the revised formula, the import price of petrol is worked out on the basis of Pakistan State Oil’s actual import costs, while the ex-refinery price payable to domestic refineries is calculated by holding the March 7 2026 premium incidentals customs duty at their pre-war levels for the next 30 days. The difference between the import price and that revised ex-refinery price must be surrendered by the refineries into the petroleum levy account, under the head of account C03901.
The industry says the numbers do not add up in its favour, and its executives have spoken out in strong terms. Adil Khattak Attock Refinery chief executive said the decision to use pre-war premiums and incidentals in motor spirit pricing would cost refineries about Rs35 a litre, and he questioned how any industry could be asked to sell its product below cost. The vice chairman of Cnergyico also expressed serious concern over the cabinet’s decision, and company officials told reporters that no consultation had taken place before the pricing rules were changed.
The instructions have gone to all six of the country’s refineries, which are Pak-Arab Refinery Limited, Pakistan Refinery Limited, Attock Refinery Limited, National Refinery Limited, Cnergyico and ENAR. The Petroleum Division has also directed the refineries to submit daily sales and deposit reports to OGRA and to the Petroleum Division, so that the government can track how much money is being collected under the new arrangement. The refineries must deposit the differential levy in line with the OGRA price notifications issued from time to time.
The government, for its part, says the benefit of the adjustment must reach the people who buy petrol, and it has told the refineries that the financial benefit will be passed on to motor spirit consumers only through a corresponding reduction in petrol prices. An editorial in The Express Tribune on 4 November, headed Fuel relief, noted that the arrangement lets petrol sell about Rs15 cheaper than global market rates, and it said the move spares motorists a punishing blow. The same editorial added that the industry’s figures put the surrender at Rs49 a litre, which is far higher than the Rs15 number in public debate.
The timing of the decision matters, because it came during the Iran-US war period, when oil prices and shipping premiums were moving sharply. The cabinet approved four changes to the petrol pricing mechanism for that period, and the 30 day window was meant to cover the immediate shock. The notified petrol price on 30 October remained unchanged at Rs377.91 a litre, with the full Rs80 petroleum levy and a Rs5 climate support levy still shown in the price publication. Pump prices are revised fortnightly, so readers should check the latest notification, because the price has moved since that date.
One point of care runs through this story, and it is that the full text of the Petroleum Division letter has not been published, so the notified wording, the exact start of the 30 day window and any later revision remain unknown. The Rs49 per litre figure is the industry’s own estimate of its burden, and it is distinct from the Rs14.71 per litre reduction in the levy component of the retail price. The refineries argue that a policy made without consultation creates regulatory uncertainty and may discourage future investment, including the upgrade projects that would let them produce cleaner fuel.
Readers should keep two things in mind. First, the dispute is about who pays for cheaper petrol at the pump, and the answer the cabinet has given is that the refineries should carry the cost for 30 days. Second, the mechanism is temporary, and what happens when the 30 days end will decide whether the industry accepts the new formula or returns to the old one. For motorists, the relief at the pump is real, and for the refineries, the cost is real too, and the balance between the two is what the government and the industry must now settle.
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