Outdated and inefficient oil refineries, coupled with heavy reliance on imported fuel, are among the key reasons behind Pakistan's high petrol and diesel prices, according to official documents from the Ministry of Petroleum and the Oil and Gas Regulatory Authority (OGRA).
The documents show that import premiums, customs duties and taxes significantly increase fuel prices before they reach consumers.
According to the documents, Pakistan's ageing oil refineries have limited production capacity and are unable to produce enough high-quality petrol and diesel to meet domestic demand.
As a result, the country imports around 70% of its petrol and 30% of its diesel from international markets, making local fuel prices vulnerable to global market fluctuations and import-related costs.
Import premiums push up fuel prices
The documents reveal that imported petrol and diesel become more expensive due to customs duties and import premiums.
An import premium alone adds around Rs20 per litre to the retail price of petrol.
Similarly, diesel carries an import premium of $5.10 per barrel, increasing its cost by approximately Rs9 per litre before taxes are applied.
Global price difference highlighted
Official figures show that crude oil is priced at around $70 per barrel in the international market.
However, petrol costs $102.13 per barrel, making it $32.13 more expensive than crude oil.
Diesel is priced at $108.50 per barrel, which is $43.60 higher than crude oil. After adding the import premium, its cost rises to $113.60 per barrel, according to the documents.
Taxes make up a large portion of fuel prices
The documents indicate that taxes and levies account for a significant share of the final fuel price paid by consumers.
The base price of petrol without premium stands at Rs158.23 per litre, while levies, taxes and premiums add Rs138.39, meaning nearly 47% of the retail petrol price consists of taxes and related charges.
For diesel, the base price without taxes and premium is Rs189.70 per litre. After adding the import premium, the price increases to Rs198.62, while levies and taxes amount to Rs119.56, accounting for nearly 39% of the total retail price.
The official documents suggest Pakistan's dependence on imported petroleum products continues to expose consumers to higher international prices, import premiums and taxation.
Experts say improving refinery capacity and producing more high-quality fuel domestically could help reduce reliance on imports over the long term.
