Pakistan’s government has cut the petroleum levy collected directly on petrol to prevent higher import costs from reaching consumers, shifting the burden to local refineries instead. According to Topline Research and the petroleum price notification effective October 31, 2026, the arrangement could leave refineries facing an estimated Rs10–15 billion in monthly costs.
Higher Import Costs, Lower Direct Levy
The petrol import premium, including freight, increased to $25.52 a barrel from $19.88. That change added approximately Rs14.71 to the cost of each litre.
Rather than add that amount to the consumer price, the government lowered the direct petroleum levy by the same amount, bringing it down from Rs80 to Rs65.29 per litre. The notification puts the resulting petrol price at Rs377.91 per litre, excluding secondary freight.
What the Notified Price Includes
The notification distinguishes between the notified petroleum levy and the amount charged directly to oil marketing companies after the refinery adjustment. Its price breakdown includes:
- Rs307.62 per litre before the petroleum levy, climate support levy and sales tax.
- A notified petroleum levy of Rs80 per litre, offset by a Rs14.71-per-litre adjustment through refineries.
- A direct petroleum levy of Rs65.29 per litre after that adjustment.
- A climate support levy of Rs5 per litre, with petrol remaining exempt from sales tax.
Why Refineries Face Rs49.02 Per Litre
The Rs14.71 adjustment is calculated using estimated petrol volumes across the country. Under the notification, refineries will surrender the corresponding amount at a rate of Rs49.02 for every litre they sell to oil marketing companies.
That larger per-litre deduction reflects local refineries’ share of supply: they produce approximately 30% of Pakistan’s petrol. The cost calculated across national volumes is therefore being recovered from a smaller pool of refinery sales, rather than spread over all petrol sold.
Monthly Impact Remains a Preliminary Estimate
Topline Research puts the potential monthly burden on refineries at Rs10 billion to Rs15 billion, based on annual petrol production of 2.6 million tonnes. The brokerage described its estimate as preliminary.
