Refineries urge govt to withdraw revised MS pricing

November 03, 2026 (MLN): Refineries have jointly urged the government to immediately withdraw the revised Motor Spirit (MS) pricing mechanism effective 31 October 2026, saying it forces them to surrender about Rs 49 per litre as Petroleum Levy (PL) without any matching recovery in their ex-refinery price, and puts viability and committed upgrade investments at risk.

The refineries said the unexpected measure will have a serious adverse impact on refinery viability and investments committed under the Brownfield Refining Policy.

In a joint representation to the Federal Minister for Petroleum, the chief executives of Attock Refinery Limited, Cnergyico PK Limited and National Refinery Limited, and the managing director and CEO of Pakistan Refinery Limited, said they respectfully protested the unilateral change.

The refineries also sought an urgent meeting with the minister this week to explain their position.

The letter refers to the Petroleum Division letter, an OGRA letter and the Petroleum Levy notification, all dated 30 October 2026.

It said the revised mechanism uses actual or last available PSO cargo costs for imported MS but freezes the premium, incidentals and customs-duty components allowed to refineries at 7 March 2026 levels.

The resulting difference of Rs 49.02 per litre is to be surrendered as PL.

The refineries said the Petroleum Division’s own communication acknowledges the continuing Iran-US war, yet pre-war pricing components are being used for MS price determination.

They said crude sourcing, freight, insurance, financing and related costs have risen sharply and remain exposed to current market conditions.

In their view, this will deprive them of cost-reflective realization and risks loss-making MS production, disrupted supplies and delayed upgrades.

They said PL is normally recovered through regulated product prices, whereas the new mechanism turns a pass-through component into an unrecovered economic burden on refineries.

They warned this will ultimately discourage local MS production.

The refineries said the Brownfield Refining Policy underpins binding Upgrade Agreements and substantial investment commitments.

They pointed to Clause 7 of the executed Upgrade Agreement, which preserves the Policy framework, including fiscal incentives and timelines, during the Upgrade Project.

They also cited Clause 8.1, which provides the MS incremental deemed-duty incentive to fund upgradation, and Clause 22.2, which requires written, signed amendments.

They said the measure is inconsistent with the stability assured under the Policy and the Agreement.

The refineries also noted that earlier pricing formula changes followed deliberation and consultation with them, while this decision was taken without giving them a chance to be heard.

They added that the Cabinet direction provides for pre-war refinery pricing components to apply for 30 days, whereas the levy notification operates till further order, which they said undermines certainty under the upgrade framework.

The refineries said they remain committed to consumer protection, reliable fuel supplies and timely completion of upgrades.

They said the cost of consumer relief cannot be shifted only to refineries at the expense of their viability and agreed investments, and that it will set a bad precedent.

They asked for withdrawal of the 7 March 2026 pricing freeze and the related differential surrender, restoration of the pricing formula applicable before 31 October 2026, and immediate instructions to OGRA to give effect to these steps.

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