Pakistan raises petrol, diesel prices by up to Rs27/litre as levy hike drives fuel cost surge

Pakistan has increased fuel prices by up to Rs27 per litre for both petrol and high-speed diesel, with domestic taxation—rather than international oil movements—driving the latest adjustment.

Under the revised structure approved by Prime Minister Shehbaz Sharif, petrol has been set at Rs393.4 per litre, up from Rs366.6, marking a 7.3% increase. High-speed diesel now stands at Rs380.2 per litre, compared with Rs353.42, reflecting a 7.5% rise.

The price revision comes even as officials said international petroleum rates remained broadly stable, indicating that the increase was primarily the result of higher domestic levies.

At the centre of the adjustment is the petroleum levy, which has been raised to Rs107.4 per litre on petrol. The government has continued to shift the tax burden between fuel categories under fiscal consolidation measures linked to the International Monetary Fund programme framework.

Total petroleum levy collections have already exceeded Rs1.2 trillion in the first nine months of the fiscal year, equal to about 82% of the annual target of Rs1.468 trillion.

Officials said further adjustments remain under consideration, including an additional Rs53 per litre levy requirement, which may be distributed across petrol and diesel in upcoming revisions.

Taxation on petrol now totals roughly Rs134 per litre, including petroleum levy, customs duty, and climate-related charges, while diesel carries lower levy exposure at around Rs36 per litre, including customs duty and climate support components.

Diesel remains a key inflationary fuel due to its heavy use in freight transport and agriculture, even though its price is still significantly below its recent peak of Rs520.4 per litre recorded on April 10.

The government is also preparing for an additional Rs2.5 per litre increase in the climate support levy from July 1, which would take the charge to Rs5 per litre as part of broader fiscal commitments under the IMF programme.

In contrast to the upward revision in petrol and diesel, prices of kerosene oil and light diesel oil were reduced following a decline in global oil benchmarks. Kerosene was cut by Rs63.6 per litre to Rs365, while light diesel oil was reduced by Rs29 per litre to Rs270.

The government’s fuel pricing strategy comes as it seeks to balance revenue collection with subsidy management, while negotiations continue under Pakistan’s $7 billion IMF bailout programme, with the next review expected in early May.