Pakistan petroleum levy and fuel pricing

The Pakistani government has established a petroleum levy collection target of Rs1.676 trillion for the 2026-27 fiscal year. Minister for Energy (Petroleum Division) Ali Pervaiz Malik indicated that these targets, based on an average levy of Rs80 per litre for petrol and high-speed diesel (HSD), are being restored in phases to meet budgetary goals and fiscal commitments with international financial institutions.

This revenue strategy has resulted in significant costs for consumers. For petrol, individuals are paying approximately 130.75 rupees in additional costs per litre beyond the base price. High-speed diesel also faces heavy taxation, with the final price of 368.29 rupees per litre including 122.47 rupees in government levies, taxes, and margins. These additional charges are placing continuous pressure on transport costs and essential goods, leading to calls for government intervention to alleviate inflationary impacts on household budgets.

In response to these costs, business organizations are seeking relief to protect economic stability. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has requested an immediate suspension of the Petroleum Development Levy (PDL) for export-oriented manufacturing, citing that rising prices for high-speed diesel and furnace oil are increasing inland freight, power generation, and supply-chain costs. FPCCI President Atif Ikram Sheikh also urged a reduction in industrial electricity and gas tariffs to remain competitive with regional peers.

Additionally, the Pakistan Business Forum (PBF) has appealed to Prime Minister Shehbaz Sharif to reduce the petroleum levy by Rs60 per litre. PBF Chief Organizer Ahmed Jawad noted that the current levy of Rs106.15 per litre on petrol, alongside rising electricity costs, is placing significant financial pressure on both consumers and business operations.