Petrol Prices in Pakistan

Petrol prices in Pakistan are high due to a combination of government levies, customs duties, dealer commissions, and oil marketing company margins, not just the base price of crude oil. As of March 2026, government levies alone account for over Rs. 124 per litre on petrol. These include:

• Petroleum Levy: Rs. 84.40 per litre

• Customs Duty: Rs. 13.31 per litre

• Climate Support Levy: Rs. 2.50 per litre

• Dealer Commission: Rs. 8.64 per litre

• OMC Margin: Rs. 7.87 per litre

Additionally, global oil prices, exchange rate fluctuations, and supply chain disruptions (such as the Strait of Hormuz closure) directly impact import costs

Petrol prices in Pakistan are regulated by the Oil and Gas Regulatory Authority (OGRA) , which determines ex-refinery prices based on the import parity price (IPP) formula . The federal government then approves the final consumer price after incorporating:

• International refined product prices (Arab Gulf FOB Platts assessments)

• Freight and insurance costs

• Inland Freight Equalization Margin (IFEM)

• Dealer commissions and OMC margins

• Government levies and duties

Currently, petrol prices are revised every 15 days (fortnightly) , with announcements typically made on the 1st and 16th of each month. However, due to extreme volatility in global oil markets, exacerbated by the Iran conflict and Strait of Hormuz closure, the government is now considering shifting to weekly or even daily price adjustments under IMF recommendations .

The last major revision on March 7, 2026 saw prices increase by Rs. 55 per litre, pushing petrol to Rs. 321.17 . This frequent volatility makes real-time tracking essential for consumers.

• International refined product prices (Arab Gulf FOB Platts assessments)

• Freight and insurance costs

• Inland Freight Equalization Margin (IFEM)

• Dealer commissions and OMC margins

• Government levies and duties

Currently, no sales tax is applied to petrol or diesel in Pakistan . However, prices remain elevated due to other levies and duties:

• Petroleum Levy: The largest component

• Customs Duty: Applied on imports

• Climate Support Levy: A newer charge introduced in 2026

Despite the absence of general sales tax (GST), the combined levies and margins effectively double the base price of fuel. For example, petrol’s base price is approximately Rs. 133 per litre, but consumers pay Rs. 321+ at the pump

Petrol prices vary by city due to the Inland Freight Equalization Margin (IFEM) a mechanism that adds transportation costs to ensure uniform pricing across the country, but ironically creates variations .

Cities farther from refineries and import terminals pay higher prices due to:

• Distance from Karachi port (where most fuel is imported)

• Distance from refineries (PARCO, ARL, NRL, PRL, Cnergyico)

• Road freight costs for tanker transport

• Regional dealer commission variations

For example, Quetta and Gilgit consistently have higher prices than Karachi because of their remote locations and difficult terrain .

IFEM (Inland Freight Equalization Margin) is a mechanism that adds transportation costs to petrol and diesel prices to ensure uniform pricing across the countrythough it actually creates the variations you see between cities .

When fuel is transported from refineries or import terminals to different cities, the government calculates the freight cost and adds it as IFEM. This ensures consumers in remote areas don’t pay the full distance-based cost, but the margin still increases prices compared to port cities like Karachi.

OGRA computes and notifies IFEM monthly based on:

• Pipeline and road freight rates

• Distance from refineries/terminals

• Transportation mode (pipeline vs. tanker)

Petrol price increases have a cascading effect on the entire economy because fuel is a basic input for transport, agriculture, and power generation .

Within hours of a price hike, consumers experience:

• Transport fare increases: Bus fares rise by Rs. 10-30 per route; inter-city fares double (e.g., Peshawar-Lahore from Rs. 2,000 to Rs. 3,000)

• Food price inflation: Vegetable and fruit prices jump 20-25% within days due to higher transport costs

• Ride-hailing surge: App-based services increase fares, reducing demand

• Household budget pressure: Middle and lower-middle-class families bear the brunt