ISLAMABAD: In a bid to curb circular debt and fund energy sector subsidies, Pakistan will increase the Petroleum Development Levy (PDL) to over Rs100 per litre on petrol and diesel in the upcoming fiscal year starting *July 2025, as part of a fresh understanding with the *International Monetary Fund (IMF) under the Extended Fund Facility (EFF).
Currently, the PDL stands at Rs78 per litre on petrol and *Rs77 on diesel, having already surged from Rs60 since July 2024. This hike has generated over *Rs1 trillion in revenue during the first 10 months of FY2024-25, with a year-end target of Rs1.281 trillion.
To complement climate-aligned fiscal reforms, the government also plans to introduce a Rs5 per litre carbon levy on both petrol and diesel.
In the *power sector, Islamabad has agreed to *eliminate the 10% cap on the Debt Service Surcharge (DSS) by *June 2025, alongside regular tariff adjustments, fuel cost pass-throughs, and the approval of a new *Circular Debt Management Plan by July.
All provincial governments have committed not to introduce any new *electricity or gas subsidies, aligning with IMF’s call for fiscal discipline. The Fund praised Pakistan’s timely tariff adjustments, noting early progress in **cost-side energy reforms, but urged accelerated implementation to secure long-term *energy sector viability and economic competitiveness.
Story by Israr Khan
