Pakistan Launches $6 Billion Refining Policy and Adjusts Fuel Prices

The Government of Pakistan approved a new oil refining policy aimed at modernizing refineries and reducing reliance on imported fuel. The policy targets approximately $6 billion in investment and includes a seven-year incentive package for refineries producing Euro 5-compliant fuel, contingent on implementation agreements with the Oil and Gas Regulatory Authority.

Fuel prices underwent multiple volatile adjustments in late July 2026. On July 30, petrol prices decreased by Rs0.75 per litre, while high-speed diesel rose by Rs2.24 per litre to Rs390.62. By July 31, the situation shifted as petrol prices fell further by Rs0.12 per litre to Rs336.03, and diesel decreased by Rs0.66 per litre to Rs392.38, effective August 1. These marginal cuts followed a sharp spike on July 31 where petrol rose by Rs1.09 and diesel by Rs2.42.

Additionally, the Oil and Gas Regulatory Authority increased the price of liquefied petroleum gas (LPG) by Rs13 per kilogram on August 1, raising the rate from Rs241 to Rs254. This hike pushed domestic cylinder costs to Rs3,001 and commercial cylinders to Rs11,546. The LPG Industries Association of Pakistan urged the government to ensure fair distribution and prevent black marketing and profiteering resulting from these price increases.