Pakistan’s four major refineries have jointly urged the government to immediately withdraw the revised motor spirit (MS) pricing mechanism, warning that the new formula threatens their financial viability and could derail billions of rupees in planned modernization.
In a joint letter to the federal petroleum minister, Attock Refinery Limited, Cnergyico PK Limited, National Refinery Limited and Pakistan Refinery Limited challenged the changes introduced on October 31, 2026, pointing to a Rs49.02 per litre levy differential they say undermines the economics of domestic refining.
The refineries warned that the squeeze could jeopardize investments committed under the Brownfield Refining Policy, designed to upgrade the country’s ageing refining infrastructure. They called on the government to reverse the revised mechanism without delay.
Under the revised formula, imported petrol is priced using actual or the latest available Pakistan State Oil (PSO) cargo costs, while premiums, incidental expenses and customs duty components for local refineries remain frozen at March 7, 2026 levels. Refineries must surrender the resulting Rs49.02 per litre difference as petroleum levy — without receiving corresponding adjustments to their ex-refinery prices.
They argue the formula ignores rising crude procurement, freight, insurance, financing and other costs amid the ongoing Iran-US war, potentially making domestic petrol production financially unviable and disrupting supplies.
Brownfield Policy Commitments and Investment Concerns
The companies also argue the decision contradicts commitments under the Brownfield Refining Policy and their government upgrade agreements.
They cited Clause 7, which protects fiscal incentives and implementation timelines during modernization projects; Clause 8.1, which provides an incremental deemed duty incentive on motor spirit; and Clause 22.2, which requires contractual amendments to be made in writing and signed by all parties.
The refineries warned that surrendering the differential would erode expected returns and threaten planned upgrades. They also complained that, unlike previous pricing changes, the latest decision was introduced without industry consultation.
Refineries Seek Immediate Government Intervention
The companies highlighted a discrepancy between the cabinet’s direction to retain pre-war pricing components for 30 days and the petroleum levy notification, which remains effective until further orders. They said the open-ended notification creates investor uncertainty and could disrupt modernization programs.
While reaffirming their commitment to consumer protection, reliable fuel supplies and timely upgrades, the refineries argued that consumer relief should not come entirely at their expense. They have requested withdrawal of the March 7 pricing freeze and levy differential, restoration of the pricing formula in place before October 31, and corrective action by the Oil and Gas Regulatory Authority (OGRA).
They have also sought an urgent meeting with the petroleum minister during the current week. Meanwhile, Pakistan Arab Refinery Limited (PARCO) is expected to approach the government separately over the revised pricing mechanism, according to sources.
