Government Restructures Petroleum Levy, Cuts Fuel Prices

The Federal Government has revised the petroleum levy structure by increasing the Petroleum Development Levy (PDL) on petrol and reducing the levy on high-speed diesel (HSD) by an identical amount, while simultaneously lowering the retail prices of both fuels by Rs1.97 per litre. The revised pricing framework became effective July 4, 2026.

According to separate notifications issued by the Petroleum Division and the Oil and Gas Regulatory Authority (OGRA), the PDL on petrol has been increased by Rs6.22 per litre, rising from Rs64.14 to Rs70.36 per litre.

Conversely, the PDL on HSD has been reduced by Rs6.22 per litre, bringing it down from Rs77.04 to Rs70.82 per litre. As a result, the levy applicable to Pakistan’s two most widely consumed petroleum products has been broadly aligned.

Despite the adjustment in petroleum levies, the government has reduced the ex-depot prices of both fuels by Rs1.97 per litre. The retail price of petrol now stands at Rs297.53 per litre, down from Rs299.50, while HSD has been reduced from Rs311.47 to Rs309.50 per litre.

The revised pricing schedule confirms that the Climate Support Levy (CSL) remains unchanged at Rs5 per litre on both petrol and HSD, whereas the General Sales Tax (GST) continues to be maintained at 0%, leaving the PDL as the principal federal levy incorporated into retail fuel prices.

Under the notified pricing formula, the ex-refinery price has been fixed at Rs198.80 per litre for petrol and Rs214.74 per litre for HSD.

The Inland Freight Equalisation Margin (IFEM) has been set at Rs6.86 per litre for petrol and Rs2.43 per litre for HSD. Meanwhile, the margins payable to Oil Marketing Companies (OMCs) remain unchanged at Rs7.87 per litre, while the dealer commission continues at Rs8.64 per litre for both products.

After incorporating freight, distribution costs and applicable margins, the price before the application of petroleum levies and other statutory charges has been calculated at Rs222.17 per litre for petrol and Rs233.68 per litre for HSD.

Separately, OGRA has increased the retail price of Superior Kerosene Oil (SKO) by Rs4.09 per litre, raising it from Rs227.05 to Rs231.14 per litre with effect from July 4, 2026.

The revised SKO pricing structure reflects an ex-refinery price of Rs200.91 per litre and an IFEM of Rs8.29 per litre. The OMC margin remains unchanged at Rs1.58 per litre, resulting in a pre-levy price of Rs210.78 per litre.

The PDL on kerosene has been retained at Rs20.36 per litre, while no Climate Support Levy or General Sales Tax has been imposed on the product under the revised pricing framework.