Pakistan may raise petroleum levy as Rs610 billion FBR shortfall persists despite global oil price drop

The government is considering an increase in the petroleum levy as revenue pressures persist, with the Federal Board of Revenue (FBR) reporting a shortfall of Rs610 billion during July–March, Business Recorder reported, citing official sources.

The move comes despite a decline in global oil prices following a two-week ceasefire between the United States, Israel and Iran, which has reduced international crude prices and created room for domestic fuel price adjustments.

FBR collected Rs9,307 billion during the first nine months of the fiscal year against a revised target of Rs9,917 billion. In March alone, collections stood at Rs1,185 billion compared to a target of Rs1,367 billion, resulting in a monthly shortfall of Rs182 billion.

Sources in the Finance Ministry and Petroleum Division said the government is evaluating options to offset revenue gaps, including increasing the petroleum levy as global prices ease. 

The government has budgeted Rs1.47 trillion in petroleum development levy collections for FY2026, with Rs871 billion already collected during July–January, accounting for 59% of the target.

According to sources, the International Monetary Fund has also urged the government to phase out fuel subsidies. Authorities have informed the lender that targeted support may be provided to low-income groups through petrol cards for motorcyclists, capped at 20 litres per month, with the cost offset through higher levies on other consumers.

Petrol, diesel prices may drop

Sources said that domestic prices of high-speed diesel and petrol are expected to decline in the upcoming fortnightly review following a drop in global crude oil prices after a ceasefire between the United States and Iran.

Initial estimates indicate that diesel prices could fall by up to Rs100 per litre, while petrol may see a reduction of around Rs60 per litre, according to industry sources.

On Wednesday, Brent crude has declined by $15.24, or 13.95%, to $94.03 per barrel, while premiums on petrol and high-speed diesel have also fallen.

Sources said that if current international trends continue and the exchange rate remains stable, Pakistan could witness one of the largest fuel price reductions in recent periods.

However, fiscal pressures arising from the recent Middle East conflict and existing revenue targets may limit the extent to which these reductions are passed on to consumers.