Petrol price freeze costs refiners PKR49/litre

November 1, 2026 (MLN): Pakistan's refiners have been handed the bill for keeping petrol prices unchanged. The new pricing mechanism could push their motor spirit (MS) margins deep into negative territory and erase a large share of sector profitability.

Under OGRA's latest petrol pricing notification, effective October 31, refineries must surrender PKR49.02 per litre of Petroleum Levy (PL) on every litre of MS sold to oil marketing companies. IMS estimates this equals about US$28 per barrel, which drags MS gross refining margins (GRMs) from roughly +US$4.8/bbl to about -US$23/bbl, according to Intermarket Securities (IMS).

The government kept the pump price at PKR377.91/litre even though landed costs rose by about PKR14.71/litre. The increase came from a higher import premium, which climbed from US$19.88 to US$25.52 per barrel, and higher customs duty, which went from PKR20.56 to PKR26.15 per litre.

Rather than pass this on to consumers, the government cut the pump-level PL from PKR80 to PKR65.29/litre and moved the adjustment onto refiners.

The burden is heavier than the headline adjustment suggests. Local refineries meet only about 30% of domestic petrol demand, and imports cover the rest. The PKR14.71/litre adjustment is calculated across total national consumption but recovered only from domestic refineries, so the effective surrender rate grosses up to PKR49.02/litre.

Based on average monthly MS volumes in 1QFY27 and a 37% effective tax rate, IMS estimates a combined pre-tax hit of about PKR12.4 billion per month across the four listed refiners.

Attock Refinery (ATRL) and National Refinery (NRL) are the most exposed. Their estimated monthly earnings hits are PKR24.2 and PKR23.1 per share respectively. ATRL's impact is about PKR4.1bn a month on 83.6 million litres of petrol sales. NRL's is about PKR2.9bn on 59.9 million litres.

Pakistan Refinery (PRL) and Cnergyico (CNERGY) have similar volumes, at about PKR2.7bn each, but larger share counts dilute the per-share impact to PKR2.7 and PKR0.3 respectively. High-speed diesel remains unaffected.

The brokerage called the move a major regulatory overhang. It comes on top of earlier clawbacks of the HSD price differential and targets one of the sector's higher-margin products.

IMS flagged a particular concern about the customs duty. The levy surrender offsets both the higher import premium and the customs duty increase.

Under the Brownfield Refinery Policy, however, the deemed duty on MS was meant to be held in escrow to help finance refinery upgrades.

The mechanism resets every two weeks based on the import premium, the customs duty differential and the domestic MS supply share. IMS has not yet built the full impact into its estimates.

It cited industry resistance and its understanding that the measure may be temporary. The brokerage will wait for the outcome of refiners' talks with the government and the next pricing notification before revising its preliminary numbers.

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