Pakistan may miss Rs 1,161 billion petroleum levy target due to global oil price surge

The federal government may fall short of its target to collect Rs 1,161 billion in petroleum levy (PL) on petroleum products, mainly due to rising oil prices both globally and domestically following Israel’s attacks on Iran, according to a media report. 

On Friday, shortly after Israel launched its attacks on Iran, the price of petrol surged by $1.98 per barrel, from $71.81 to $73.79, while high-speed diesel (HSD) rose by $2.54 per barrel, from $76.14 to $78.68. As a result, motorists may face an increase in petrol prices by Rs 4.38 per litre and HSD by Rs 5.02 per litre, effective June 16, 2025.

For the outgoing fiscal year, the government had set a target of Rs 1,161 billion in PL collections, but as of March 2025, it has only collected Rs 834 billion, about 71% of the revised target. 

Market experts warn that rising fuel prices may further reduce fuel consumption, potentially leading to a shortfall in the government’s Rs 1.4 trillion PL target for 2025-26.

The premium on petrol has been raised by $2.16 per barrel, from $77.19 to $79.35, while the premium on HSD remains the same at $3.25 per barrel.

Estimates show that the cost of petrol will rise by Rs 3.98 per litre, from Rs 137.02 to Rs 141, while HSD will increase by Rs 4.66 per litre, from Rs 140.92 to Rs 145.58. 

Customs duties are also expected to rise, with HSD’s duty projected to increase from Rs 14.20 to Rs 14.56 per litre, and petrol’s from Rs 13.70 to Rs 14.10 per litre. 

Additionally, the US dollar conversion rate is expected to increase from Rs 282.20 to Rs 282.49.

These prices exclude adjustments made by Pakistan State Oil (PSO) on petrol and HSD. If the government allows these adjustments, prices could rise further.

Since March 2025, the government has imposed an additional PL of Rs 18.02 per litre on petrol and Rs 17 per litre on HSD, abolishing the previous cap of Rs 60 per litre through an ordinance. This move is expected to generate Rs 90 billion quarterly and Rs 300 billion annually based on current consumption levels.

The Oil and Gas Regulatory Authority (OGRA) will collect data on international oil prices, exchange rates, and other factors affecting fuel prices from June 16, 2025. The Finance Division will announce the final prices on June 15.