Pakistan’s refineries warn petrol pricing shake-up puts $6bn upgrade plan at risk

Pakistan’s oil refineries have warned that the government’s latest intervention in petrol pricing could push them into losses and put the country’s roughly $6 billion refinery upgrade programme at risk.

The Federal Cabinet approved a revised petrol pricing mechanism on Friday, 30 October, for an initial 30 days, amid Iran–US tensions. Under it, the import price of petrol is based on the actual cost of the relevant PSO cargo. But refineries must calculate their ex-refinery prices using the premiums, incidentals and customs duty that applied on 7 March 2026, before the disruption. The difference must be surrendered under the petroleum levy account, with the benefit passed to consumers.

Petrol stayed at Rs377.91 a litre, while diesel rose Rs2.29 to Rs402.96 for 31 October to 2 November. The government says the change gives consumers Rs14.71 a litre of relief. But the industry disagrees: Usama Qureshi, vice chairperson of Cnergyico PK Limited, estimated it could impose an extra burden of around Rs49 a litre on locally refined petrol.

Qureshi told The News that abrupt changes to the formula were creating uncertainty for investors. “How can you operate a capital-intensive industry when the goalposts change every other day?” he said. The sector says it has already absorbed more than Rs80 billion through compressed diesel margins, while petrol trades at around $112 a barrel against crude oil at about $119 — a negative gap of roughly $7.

Why it matters

Four refineries have signed upgradation agreements with the Oil and Gas Regulatory Authority (Ogra), but the country’s largest state-owned refinery has yet to sign, reportedly because of reservations among its foreign shareholders. The programme aims to modernise plants, improve fuel quality, cut furnace oil production and strengthen energy security. Industry representatives warn repeated interventions make it harder to secure financing for such upgrades, since lenders must weigh the chance of similar measures during repayment.

What happens next

The Petroleum Division has written to all six major refineries — Pak-Arab Refinery, Pakistan Refinery, Attock Refinery, National Refinery, Cnergyico and ENAR — directing them to deposit the price difference under the petroleum levy account and submit daily sales reports with payment receipts for verification. The industry also argues upstream oil producers, who benefit directly from higher crude prices, should share the cost of protecting consumers.

This article is for general information and education only. It is not legal or financial advice.

Sources

• https://www.thenews.pk/print/1446121-refineries-say-petrol-pricing-intervention-puts-6bn-upgrade-plan-at-risk (The News, 1 Nov 2026)
• https://www.techjuice.pk/govt-revises-petrol-pricing-mechanism-to-provide-relief-to-consumers/ (TechJuice, 31 Oct 2026)
• https://thestandard.com.pk/government-increases-diesel-price-by-rs-2-29-liter/ (The Standard, 31 Oct 2026)