Business

Govt to raise petroleum levy in upcoming FY 2025-26 budget

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Digital Desk

1 year ago

ISLAMABAD: Pakistan is considering raising the Petroleum Development Levy (PDL) to over Rs100 per litre in the upcoming fiscal year as part of a new understanding with the International Monetary Fund (IMF).

As per details, the IMF delegation has arrived in Islamabad on Monday to finalise budget negotiations for the upcoming fiscal year 2025-26.

The current levy on petrol and diesel stands at Rs 78 and Rs 77 per litre, respectively. Islamabad will increase the levy to boost non-tax revenues and support power and electric vehicle subsidies and help reduce circular debt, The News reported, citing official sources.

The move to hike petroleum levy 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, yielding 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.

As part of its climate-aligned fiscal reforms, Pakistan has also committed to introducing a Rs5 per litre carbon levy on petrol and diesel.

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.

Digital Desk