Pakistan Collects Rs4.4 Trillion in Petroleum Levy Over Four Years

Government Rules Out Immediate Petroleum Levy Cut Despite Rs4.4 Trillion Collections

ISLAMABAD: The federal government has collected Rs4.4 trillion through the petroleum levy over four fiscal years, exceeding its cumulative revenue target by Rs227 billion. However, Planning Minister Ahsan Iqbal has ruled out an immediate reduction in the levy, saying any phased relief would be considered in the next federal budget.

Iqbal's remarks came as Petroleum Minister Ali Pervaiz informed the National Assembly that petroleum levy collections between FY2022-23 and FY2025-26 formed part of the fiscal targets agreed with the International Monetary Fund (IMF) under its Extended Fund Facility.

Speaking to the media, Iqbal said a committee had been established to examine practical proposals for gradually reducing the petroleum levy in the next budget. The government delegation will include Deputy Prime Minister Ishaq Dar, Planning Minister Ahsan Iqbal and Rana Sanaullah, while Jamaat-e-Islami (JI) will nominate three representatives.

The committee will discuss possible measures to provide relief to the public while taking the government's limited financial resources into account.

The development follows protests by Jamaat-e-Islami against petroleum taxes amid rising international oil prices linked to the ongoing conflict in the Middle East. A delegation from the party also met the prime minister earlier this week.

The government currently imposes a petroleum levy of Rs80 per litre, a climate levy of Rs5 and customs duty of Rs20.56 per litre, bringing the combined charges to approximately Rs106 per litre.

Iqbal warned that Pakistan's economic position remained vulnerable to external shocks and that measures introduced for immediate relief could create financial difficulties later.

He said the country could not afford to repeat past economic mistakes after considerable efforts to stabilise the macroeconomic situation. Uncertainty surrounding the Middle East conflict and rising global oil prices, he added, had prompted countries to take precautionary steps to protect their economies.

The minister cautioned that further increases in international energy prices could expose Pakistan to additional risks if the government adopted measures that provided temporary relief without considering their longer-term fiscal consequences.

Iqbal also disclosed that the government had launched a relief scheme for low-income groups, attracting approximately 12.7 million registrations.

Petroleum Levy Collections Exceed Targets

In a written response submitted to the National Assembly, Petroleum Minister Ali Pervaiz provided details of the government's petroleum levy revenue and collection targets.

According to the response, the government collected Rs4.4 trillion between FY2022-23 and FY2025-26, compared with a cumulative target of approximately Rs4.2 trillion.

Provisional collections reached Rs1.567 trillion in FY2025-26, exceeding the annual target of Rs1.468 trillion. For the current fiscal year, the government has set a petroleum levy collection target of Rs1.676 trillion.

Ali Pervaiz said petroleum levy collections were also part of the fiscal commitments agreed with the IMF under the Extended Fund Facility.

In May, the petroleum minister had recommended to the finance minister that the annual levy target be reduced to Rs1 trillion and the per-litre rate lowered to Rs50 because of elevated international oil prices. The government did not adopt the proposal.

Government Reports Adequate Fuel Stocks

Responding to a separate question from MNA Sharmila Faruqi about fuel availability, the petroleum minister said the country's oil supply chain was under continuous monitoring by the Oil and Gas Regulatory Authority (OGRA), in coordination with refineries, oil marketing companies, the Petroleum Division and the Executive Committee of the National Coordination and Management Council.

For September 2026, petrol demand was projected at approximately 692,000 tonnes, while domestic refineries were expected to supply 262,000 tonnes.

Oil marketing companies planned to import approximately 511,000 tonnes of petrol to help meet demand.

No high-speed diesel imports were planned for the month because of sufficient opening inventories and expected domestic refinery production of around 555,000 tonnes.

As of September 22, petrol stocks stood at approximately 395,000 tonnes. An additional 56,000 tonnes were at berth, while another 55,000 tonnes were at outer anchorage in Pakistani waters.

Together, these supplies amounted to approximately 506,000 tonnes, enough for around 22 days of demand based on average daily sales of 22,500 tonnes.

High-speed diesel inventories stood at approximately 568,000 tonnes, providing around 30 days of supply at average daily consumption of 19,000 tonnes.

The petroleum minister said petrol and diesel consumption remained broadly in line with official estimates, with only minor variations.

Oil marketing companies have been instructed to monitor unusual sales patterns at retail outlets to prevent hoarding, diversion and misuse while ensuring uninterrupted fuel supplies.

Rs66.5 Billion in Oil Companies' Claims Remain Outstanding

The National Assembly was also informed that Rs66.5 billion in Price Differential Claims (PDCs) submitted by oil marketing companies remained unpaid.

According to the petroleum minister, the government had disbursed Rs53.8 billion against total claims of Rs120.3 billion.

The release of a further 25% of the claims will depend on confirmation that the required documentation has been submitted.

OGRA is reviewing the claims, and an additional 25% of the PDC amount will be released after an audit and verification by an auditor appointed by the regulator. The minister confirmed that the auditor had already been selected.