Pakistan Targets Rs1.676 Trillion Petroleum Levy Collection

The federal government has set a target of collecting Rs1.676 trillion through the petroleum levy during fiscal year 2026-27, with the budget calculated on the assumption of an average levy of Rs80 per litre on both petrol and High-Speed Diesel (HSD). Energy Minister for Petroleum Division Ali Pervaiz Malik disclosed the figures in a written response submitted to the National Assembly on Friday.

The minister explained that the levy is being restored towards the level originally incorporated into the budget after authorities temporarily reduced it during a period of instability in international oil prices. The reduction was intended to provide consumers with some relief from elevated fuel costs.

Petroleum levy rates underwent several changes during July and August. On July 1, petrol carried a levy of Rs66.64 per litre, which was lowered to Rs64.14 the following day. The rate then increased to Rs70.36 on July 4 before reaching Rs80 per litre on July 11, where it has remained.

HSD followed a separate pattern. Its levy started at Rs79.54 per litre on July 1 and dropped to Rs77.04 on July 2 before falling further to Rs70.82 on July 4. The government subsequently raised the rate in multiple steps, taking it to Rs72.26 on August 6, Rs73.47 on August 7, Rs74.28 on August 8, Rs76.28 on August 12, Rs77.28 on August 13 and Rs78.28 on August 14.

By August 20, the petroleum levy on both petrol and HSD had reached Rs80 per litre. Compared with July 1, the levy imposed on petrol had increased by Rs13.36 per litre.

Ali Pervaiz stated that the petroleum levy collection target was included in the federal budget and represents part of the government’s fiscal commitments made with international financial institutions.

The minister also said the Petroleum Division had not conducted a separate assessment of how the levy affects different categories of consumers.

Asked whether the government could lower the levy to ease pressure on consumers, Ali Pervaiz said any such decision would depend on available fiscal room, the government’s revenue needs, commitments to international financial institutions and movements in global oil prices.

He further noted that the government attempts to pass decreases in international oil prices on to domestic consumers whenever circumstances permit. Any future reduction in the petroleum levy or retail fuel prices will therefore depend on global market developments and the country’s overall fiscal position.