Oil refineries in Pakistan are now selling petrol at a price calculated as though the war never raised their costs. The government froze part of the formula at pre-war levels and left refineries holding the difference.
One thing to be clear about straight away. Nobody is charging motorists an extra Rs 49 a litre.
That figure is a refining-side estimate, and it works in the opposite direction. Here is what actually changed.
What Changed on 30 October
The federal cabinet approved a revised petrol pricing mechanism on 30 October 2026. The Petroleum Division issued the notifications.
For 30 days, three parts of the formula are held at their levels of 7 March 2026. Those are the premium, the incidentals and the customs duty.
That date matters because it is before the war. The formula now prices as if the war premium does not exist.
Meanwhile the import price of petrol is taken from the actual cost of the relevant state oil company cargo. That is a real, current cost.
So a gap opens between what the fuel actually cost to bring in and what the frozen formula allows. Refineries surrender that gap as petroleum levy.
They also file daily domestic sales reports and payment receipts for verification. The Petroleum Division listed a petroleum levy notification taking effect on 31 October 2026.
Where the Rs49 Comes From
The widely quoted figure is not one number. It is two, added together.
It comes from Adil Khattak, chief executive of Attock Refinery Limited, in a communication to the government. He breaks it down.
| Component | Per litre |
|---|---|
| Pre-war premiums and incidentals in the formula | Rs35 |
| Customs duty recovery diverted to the levy | Rs14 |
| Total | Rs49 |
That split is worth holding on to, because the two halves are different problems.
The Rs35 is about the war premium. If international costs fall back, it shrinks on its own.
The Rs14 is structural, and it is the part that threatens the upgrade programme. We will come to why.
Note also whose figure this is. It is one refinery chief executive's estimate, not a government calculation and not an audited industry total.
The Escrow Account Nobody Mentions
This is the part that explains why refineries say billions of dollars of modernisation is now at risk.
We went to the official refining policy for brownfield upgrades. It sets out how the upgrades are paid for.
Refineries get 10 percent tariff protection on motor gasoline and diesel, for seven years from signing the upgrade agreement.
And the policy requires money to be paid into a joint escrow account. That includes 10 percent on motor gasoline as an incremental incentive.
Now the clause that makes this serious. The policy states that the escrow account cannot be used as a charge, lien, collateral or any instrument of borrowing.
So refineries cannot borrow against it. The cash arriving in that account is the funding, not security for a loan.
Which means diverting that stream does not reduce a paper entitlement. It removes the money that pays for the work.
That is the mechanical link between a pricing notification and a five to six billion dollar programme, and it is missing from the coverage.
Thirty-Six Days
The sequence of dates is the sharpest fact in this story.
| Date | What happened |
|---|---|
| 10 September 2026 | Refining policy listed as notified |
| 24 September 2026 | Four refineries sign upgrade agreements |
| 30 October 2026 | Cabinet approves the pricing change |
| 31 October 2026 | Petroleum levy notification takes effect |
Count the gap in the middle. Thirty-six days separate the signatures from the change.
The incentive period those signatures started runs for seven years. Thirty-six days is about 1.4 percent of it.
There is more to it than that, too. The refineries were under pressure to sign at all.
The policy cuts the deemed duty on diesel from 7.5 to 5 percent for any refinery that does not sign. That is a third of it gone.
Four signed, a week ahead of the reported deadline. The economics then moved.
What the Policy Actually Promises
Khattak also says the change breaches an assurance protecting refineries from adverse changes while projects are being executed.
We looked for that assurance, and this is where we have to be careful.
The published policy we read sets out no general promise against future policy or tax changes. What it says is narrower.
It provides that existing contractual commitments to a refinery override conflicting provisions of the policy.
That cuts both ways. A protection of this kind would sit in the signed upgrade agreement rather than in the policy.
And an upgrade agreement is a contract. So the argument may well hold through the agreement, just not through the policy document.
Only the parties have seen those agreements. Until someone publishes one, this stays a contractual question rather than a settled fact.
Not the First Concession
Something else is missing from most accounts. This is not the first time margins have been trimmed this year.
Refineries had already agreed to cap their diesel spread, first at 41.89 dollars and then at 38 dollars.
That second cap is a further reduction of about nine percent on the first. So the petrol change is the third step, not the opening one.
Khattak also puts the cost of delaying the upgrades at roughly 1.5 billion dollars a year for the economy.
What It Means at the Pump
For motorists the intended effect is the reverse of a price rise.
By holding part of the formula at pre-war levels, the government keeps the war premium out of the retail price. The cost sits with refineries instead.
The government's position is that the benefit reaches consumers only through a corresponding cut in the retail price.
The petroleum minister, Ali Pervaiz Malik, said 12 to 13 million deserving people were receiving subsidised petrol at pre-war prices.
We are not printing a pump price here. Petrol is priced on a daily cycle now, so any figure would be out of date by tomorrow.
Check the Petroleum Division's own daily notification for the current rate rather than a blog, including ours.
Which Refineries This Involves
Pakistan's refining is concentrated in a small number of companies.
Attock Refinery, Pakistan Refinery, National Refinery, Cnergyico and the Pak-Arab complex are the names that appear throughout this story.
Four of them signed the upgrade agreements in September, with the Pak-Arab complex reported as expected to follow.
We are not stating a headcount for the industry, because operational status changes and a stale number is worse than none.
What Happens in Thirty Days
The arrangement was set for 30 days, which puts the review around the end of November.
Nothing published says what follows. It could be extended, revised or allowed to lapse.
Two things will decide it. Whether international premiums fall back, and whether the upgrade funding question gets a separate answer.
A temporary measure on a seven-year commitment is an uncomfortable combination, and both sides know it.
Final Thoughts
Strip away the headline number and this is a decision about who carries a war premium. The government put it on refineries for 30 days and kept it out of the pump price.
The harder question is the Rs14, because that money was earmarked for an escrow account the refineries cannot borrow against. Thirty-six days after signing seven-year agreements, the stream funding those upgrades was pointed somewhere else.
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Frequently Asked Questions
What is the new petrol pricing formula in Pakistan?
For a 30-day period the premium, incidentals and customs duty in the formula are fixed at their 7 March 2026 levels. The import price itself reflects whatever the relevant state oil company cargo truly cost to bring in. Refineries hand over the difference as petroleum levy.
Does this add Rs49 to the price of petrol?
No, and it is important not to read it that way. The Rs49 is an estimate of what refineries absorb, not a charge on motorists. The mechanism exists to keep that cost out of the retail price.
Where does the Rs49 figure come from?
It originates with Attock Refinery Limited's chief executive, Adil Khattak, in a letter to government. He puts Rs35 on the frozen premiums and incidentals, and Rs14 on diverted duty recovery. Treat it as one executive's estimate rather than an official calculation.
What is the ex-refinery price?
It is the rate at which a refinery sells to oil marketing companies. Taxes, duties, dealer commission and distribution costs all sit on top of it. So it is well below what you pay at the pump.
Why are refineries worried about their upgrade projects?
Because the official policy routes part of the duty on motor gasoline into a joint escrow account for those projects. That account cannot be used as collateral for borrowing, so the money flowing in is the funding. Divert the stream and the project loses its cash, not just an entitlement.
What is the Brownfield Refineries Upgradation Policy?
It is the government framework for modernising Pakistan's existing refineries. It offers 10 percent tariff protection on petrol and diesel for seven years from signing, with money paid into a joint escrow account. Refineries that do not sign see the deemed duty on diesel cut from 7.5 to 5 percent.
Will petrol prices go up because of this?
We will not predict a retail price, and nobody honestly can. The mechanism is built to hold the war premium out of what you pay. Government says the resulting benefit reaches consumers through the retail price. Rates are now set daily, so watch the official notification.
How long does the arrangement last?
Thirty days were allowed from late October, which puts a review near the close of November. No published document states what follows it. Extension, revision or expiry all remain open.
Is this the first cut to refinery margins this year?
No. Refineries had already capped their diesel spread twice, at 41.89 dollars and then 38 dollars. The second cap trimmed about nine percent off the first, so the petrol change is the third step.
Which companies refine oil in Pakistan?
Refining here sits with a handful of operators. Those appearing through this episode are National Refinery, Cnergyico, Pakistan Refinery, Attock and the Pak-Arab complex. Four put their names to upgrade agreements during September, and one was said to be joining them. We avoid quoting a sector total, because operating status shifts.
