Another Change Recommended in Oil Price-Setting Formula
Mian Nadeem | Published October 07, 2026 | 05:45 PM
The Petroleum Division has proposed a change in the diesel pricing formula in Pakistan. According to sources in the Ministry of Petroleum, the refining margin is recommended to be reduced from $41 to $30 under extraordinary circumstances. During wartime, the diesel price would be determined based on the actual crude oil cost plus a $30 margin.
The proposal includes removing the 10% customs duty on diesel and restoring the actual import duty. The Oil and Gas Regulatory Authority (OGRA) and KPMG have been tasked with creating a new crude oil-based formula for wartime conditions.
Pakistan State Oil (PSO) will be the sole importer of diesel, with additional costs covered through the Inland Freight Equalization Margin (IFEM). A review of the depot network has been completed to reduce freight costs, and 6 depots will be removed from the IFEM freight pool, affecting various locations.
OGRA will instruct oil companies to maintain product stocks at relevant depots. These 6 depots will be excluded from IFEM freight calculations from January 1, 2027. OGRA aims to finalize the necessary amendments to the freight equalization formula by December 2026.
Unlike diesel, the current petrol pricing system will remain unchanged, and no immediate adjustments are planned. Pakistan aims for complete deregulation of the petrol market by June 30, 2027. OGRA has been directed to create a phased roadmap for petrol deregulation and submit a policy statement on consolidation in the oil sector.