Print Print edition: 2026-06-13

POL products: Over Rs1.6trn budgetary target set for Petroleum Levy

Published June 13, 2026 Updated June 13, 2026 08:35am

4 min

By Wasim Iqbal

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ISLAMABAD: The government has set a budgetary target of Rs 1.676.509 trillion for petroleum levy (PL) on petroleum products for next fiscal year (2026-27), a rise of 11.8 percent.

Sector experts told this correspondent that the government intends to raise the levy to a high of Rs 100 per litre given that there is no longer any cap on PL subsequent to an amendment to the Petroleum Levy Ordinance.

The budgeted target for next year represents a rise of Rs 178.509 billion compared to the current revised estimates of Rs1,498 billion.

The PL revenue has been given high priority by successive federal governments as it is not part of the Federal Divisible Pool (FDP) that must be shared with the provinces under the National Finance Commission (NFC) formula.

The budget 2026-27 also envisages climate support levy (CSL) of Rs 50 billion increased by Rs 2 billion from current revised estimates of Rs 48 billion. The consumers are paying Rs 2.50 per litre CSL which will be increased to Rs 5 per litre in next budget as per agreement with IMF.

A budgeted target of Rs 15.736 billion has been set through the imposition of a levy on Off-the-Grid (Captive Power Plants) for next fiscal year against a revised budgetary target of Rs 14 billion in the current fiscal year. The original target of current fiscal year was Rs 105 billion. A low budgetary target has been set for next year as the bulk of industry has shifted to the grid.

The National Assembly passed the “Off-the-Grid (Captive Power Plants) Levy Bill, 2025.” This levy will initially be 5 percent, increasing to 10 percent by July 2025, 15 percent by February 2026, and 20 per by August 2026.

The government has also proposed to increase the Gas Infrastructure Development Cess (GIDC) collection to Rs2.248 billion for next fiscal year, up from the revised current estimate of Rs 2 billion. The GIDC was originally budgeted at Rs2.4 billion for the current fiscal year.

The Pakistan People’s Party (PPP) government has imposed this cess to generate revenue to build mega oil and gas pipelines. However, the textile industry and other industrial barons obtained stay orders, and the issue was taken up by the Supreme Court of Pakistan during the Pakistan Tehreek-e-Insaaf (PTI) government.

In June 2020, the Supreme Court of Pakistan ruled that various sectors of the economy must clear outstanding GIDC payments worth Rs407 billion in instalments, but the government failed to receive payments due to industries obtaining stay orders again.

Natural Gas Development Surcharge (GDS) — the difference between the prescribed and sale price of gas that goes to provinces — has been projected to bring Rs 70.814 billion in revenue next year against the original budgeted Rs 49.437 billion and revised Rs 63 billion in the outgoing fiscal year.

The government envisages collecting Rs 3.455 billion in PL on Liquefied Petroleum Gas (LPG) in the next fiscal year 2026-27, compared to the revised target of Rs3.463 billion for the current fiscal year. The original budget for the PL on LPG in the current fiscal year was Rs 5 billion.

The budget for fiscal year 2026-27 also envisages Rs20.500 billion to be retained as a discount on local crude oil prices. This is higher than the revised estimate of Rs 19.488 billion for the current fiscal year. The original budget for the current year was Rs 30 billion.

The budget for next year also proposes an increase royalty on crude oil and natural gas for provinces. The budgeted amount for royalty on crude oil is set at Rs45.504 billion for the next financial year against the revised estimate of Rs 69 billion for the outgoing year. The government budgeted Rs 95 billion in royalty on natural gas in the next fiscal year against a revised target of Rs 85 billion and an original budget of Rs 138 billion in 2025-26.

Next year’s budget envisages Rs 17 billion on account of windfall levy on crude oil against a budgeted amount of Rs20 billion for the current financial year 2025-26. Windfall levy on gas has been budgeted at Rs 1.127 billion against revised estimate of Rs 1.239 billion for the current fiscal year.

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