Four of Pakistan’s major oil refining companies have jointly called on the federal government to immediately withdraw a newly revised motor spirit pricing mechanism, warning that the policy jeopardizes their operations and risks derailing multi-billion-rupee modernization projects. The appeal was submitted in a joint letter addressed to the federal petroleum minister by Attock Refinery Limited, Cnergyico PK Limited, National Refinery Limited, and Pakistan Refinery Limited.

Dispute Over the October 31 Pricing Revisions

The controversy centers on pricing changes introduced on October 31, 2026, which established an unadjusted levy differential of Rs. 49.02 per litre. Under the revised pricing framework, imported petrol is valued on the basis of actual or the latest available cargo costs incurred by Pakistan State Oil. In contrast, key pricing components for domestic refineries—including premiums, incidental charges, and customs duties—remain capped at levels established on March 7, 2026.

Because of this structure, local refiners are required to remit the resulting Rs. 49.02 per litre difference to the state as a petroleum levy. However, this remittance occurs without any corresponding upward adjustment to their ex-refinery prices. Domestic refiners argue that this mechanism fails to reflect operational realities, particularly escalating expenditures related to crude oil procurement, maritime freight, insurance premiums, and financing expenses driven by the ongoing Iran-US war. The companies cautioned that unabsorbed cost pressures could render domestic motor spirit production financially unsustainable, potentially triggering supply disruptions across the country.

Threats to the Brownfield Refining Policy

The refining companies maintained that the revised formula breaches commitments established under the government’s Brownfield Refining Policy, alongside associated bilateral upgrade agreements designed to modernize Pakistan’s aging petroleum processing facilities. The signatories noted that surrendering the differential directly cuts into the financial returns required to justify extensive modernization outlays.

To support their position, the refiners highlighted several contractual and policy safeguards:

• Clause 7: Guarantees the protection of fiscal incentives and project timelines throughout modernization efforts.
• Clause 8.1: Formulates an incremental deemed duty incentive applied directly to motor spirit.
• Clause 22.2: Stipulates that any contractual amendments must be executed in writing and endorsed by all contracting parties.

The refiners also pointed out that, unlike past formula revisions, the October 31 mechanism was instituted unilaterally, without prior consultation with domestic industry stakeholders.

Discrepancies and Industry Demands

The joint letter raised concerns over a procedural contradiction between executive directives and administrative implementation. While the federal cabinet instructed that prewar pricing elements be preserved for a temporary window of 30 days, the petroleum levy notification was issued without an expiration date, stating it remains effective until further orders. According to the refiners, this open-ended mandate generates substantial regulatory uncertainty for investors and threatens to interrupt ongoing upgrade schedules.

While affirming their dedication to domestic fuel security and consumer protection, the four refiners stressed that policy relief for consumers should not be financed solely at the expense of domestic refining stability. The companies have requested the immediate withdrawal of the March 7 pricing freeze and the Rs. 49.02 levy differential, the reinstatement of the pricing formula utilized prior to October 31, and formal regulatory intervention by the Oil and Gas Regulatory Authority. Additionally, the refiners have requested an emergency meeting with the petroleum minister during the week, while Pakistan Arab Refinery Limited is anticipated to engage the government independently regarding the policy.