The government is considering hiking the Petroleum Development Levy (PDL) on petrol and diesel to over Rs100 per litre starting July 2025 as part of a new agreement with the International Monetary Fund (IMF), The News reported, citing official sources.
The current levy stands at Rs78 per litre on petrol and Rs77 on diesel and will be raised to support power sector subsidies and efforts to reduce the country’s mounting circular debt.
The move to hike PDL is central to Pakistan’s broader plan to enhance non-tax revenues and tighten its fiscal position under the IMF’s Extended Fund Facility (EFF).
Since July 2024, the PDL has already increased sharply from Rs60 to Rs80 per litre, generating over Rs1 trillion in revenue during the first ten months of the outgoing fiscal year 2024-25. The government aimed to collect Rs1.281 trillion from the levy by year-end.
Additionally, Pakistan has committed to introducing a Rs5 per litre carbon levy on petrol and diesel as part of its climate-aligned fiscal reforms.
In the power sector, the government will lift the 10% cap on the Debt Service Surcharge (DSS) applied to power bills by the end of June 2025. This step is intended to help reduce the escalating circular debt.
All provinces have agreed not to introduce new power or gas subsidies, reinforcing efforts toward long-term fiscal and energy sector sustainability.
The IMF noted that timely power tariff adjustments have helped reduce the stock and flow of circular debt. While early progress has been made on cost-side reforms, the Fund stressed the need to accelerate these measures to ensure the energy sector’s viability and boost Pakistan’s competitiveness.
