Government Adjusts Fuel Pricing to Cut Costs

The government has revised the petrol pricing mechanism by requiring oil refineries to absorb the difference between import and ex-refinery prices through a petroleum levy, as reported in the editorial on November 4, 2026.

With international fuel prices rising due to the US-Israeli war on Iran, the government faces limited options to control domestic prices without negatively impacting fuel companies' profits.

The new policy, approved by the federal cabinet on October 30, allows refineries to surrender the price differential, resulting in petrol being sold Rs15 cheaper than global market rates.

Industry officials claim the policy was implemented without prior consultation, leading to refineries selling petrol below production cost and creating regulatory uncertainty that could deter future investment.