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Petroleum Levy in Pakistan Set to Rise Under IMF Commitments
- The federal government in Pakistan has announced a significant increase in the petroleum levy for the fiscal year 2025-26, following IMF's RSF programme conditions.
- The petroleum levy on diesel will immediately rise by Rs2.5 per litre to reach Rs57.5 per litre, while for petrol it will increase to Rs62.5 per litre.
- Projected rates for FY2025-26 suggest a further increase to Rs70 per litre for diesel and Rs80 per litre for petrol.
- The expected revenue generation from this levy hike is estimated at Rs1,281 billion for the coming fiscal year.
- Recent amendments to the Petroleum Products (Petroleum Levy) Ordinance, 1961 have been proposed to accommodate these new rates and future adjustments.
- A carbon levy is also set to be imposed on petroleum products, with the collected funds designated for climate mitigation and resilience initiatives.
- In FY2023-24, the petroleum levy rates were Rs60 per litre for petrol, Rs50 for diesel, and Rs10 for other petroleum products.
- The proposed changes are legally compliant and awaiting cabinet approval.
- These adjustments are part of broader fiscal reforms linked to negotiations with the IMF to stabilize Pakistan's economy.
- The petroleum levy is crucial in financing subsidies and power purchase prices in Pakistan.
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