ISLAMABAD: The government’s decision to significantly reduce the petroleum levy (PL) on petrol is likely to impact its revenue projections, potentially leading to a revision of the budgeted target for the current fiscal year, sources said.
Prime Minister Shehbaz Sharif on Friday announced a reduction of Rs80 per litre in the PL on petrol, bringing it down from Rs160.61 to Rs80.61 per litre, effective April 4, 2026. As a result, petrol prices declined sharply to Rs378.41 per litre from Rs458.41, while the price of High-Speed Diesel (HSD) remained unchanged at Rs520.35 per litre.
A day earlier, the government had already removed the PL of Rs55.24 per litre on HSD, opting to keep diesel prices lower due to its critical use in agriculture and public transport. The adjustment was partially offset by increasing the levy on petrol before the subsequent reduction.
For the current fiscal year, the government had set an ambitious PL collection target of Rs1.468 trillion after removing the cap through the Finance Bill 2025–26. However, in the first half of the fiscal year (July–December 2025), only Rs82 billion was collected from petrol under this head.
Officials indicated that the latest reduction, approved in consultation with the International Monetary Fund, may create a shortfall in projected revenues, necessitating a reassessment of the levy target in the coming months.
While the move is expected to provide immediate relief to consumers amid rising fuel costs, it also underscores the delicate balance between fiscal targets and public affordability in Pakistan’s economic management.
Story by Wasim Iqbal
