Petrol & diesel: Petroleum Levy hiked to meet IMF ‘terms’
- Fuel prices surged by up to Rs 15 per litre as Pakistan increases petroleum levies to satisfy IMF demands, intensifying inflationary pressures
Pakistan's government increased the Petroleum Levy on petrol and HSD to meet IMF conditions, leading to higher fuel prices and exacerbating cost-push inflation nationwide.
- Impact of fuel price hikes on inflation.
- Details of the Petroleum Levy increase.
- IMF conditions driving fuel levy increases.
- Government's petroleum levy collection targets.
ISLAMABAD: To meet IMF conditions, the government has increased the Petroleum Levy (PL) on petrol and High-Speed Diesel (HSD) by Rs 13.91 per litre each. This move is expected to worsen cost-push inflation, which is already under pressure. The weekly Sensitive Price Index (SPI) surged by 15.16 percent year-on-year for the week ending May 7, primarily due to rising fuel costs.
Effective May 9, the retail rates for HSD and petrol rose by Rs 15 and Rs 14.93 per litre, respectively.
These hikes were driven by significant adjustments to the Petroleum Levy. HSD Levy increased from Rs 28.69 to Rs 42.60 per litre and petrol levy increased from Rs 103.50 to Rs 117.41 per litre.
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Furthermore, the ex-refinery price for HSD rose by Rs 10.47, while petrol saw a marginal increase of Rs 1.08. The substantial hike in the levy remains the primary driver of the current price increase.
During the July–April period of FY26, the government successfully collected Rs 1.3 trillion in petroleum levies, nearing the annual target of Rs 1.4 trillion. To close the gap, the IMF has authorized the government to implement the remaining Rs 53 per litre increase in the levy across two distinct phases.
To slightly offset the overall price surge, the government reduced the Inland Freight Equalization Margin (IFEM) on HSD by Rs 9.38 per litre from Rs 17.14 to Rs 7.76 per litre and on petrol reduction was seen from Rs 7.32 to Rs 7.25 per litre.
Copyright Business Recorder, 2026
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