Govt to generate more revenue by increasing petroleum levy to Rs70 per litre

ISLAMABAD: The federal government anticipates earning more revenue between 15 and 31 March by increasing the petroleum levy (PL) on both petrol and high-speed diesel (HSD). This increase of Rs10 per litre raises the PL from Rs60 to Rs70 per litre.

Sources within the Petroleum Division indicate that the petroleum levy has already generated Rs718 billion in the first eight months of the current financial year (July 2024 to February 2025). The government’s annual target for revenue from this levy is Rs1.28 trillion.

This development comes after the prime minister announced on Saturday that existing petroleum prices would be maintained. The government had intended to pass on some financial relief to consumers through reductions in electricity bills instead.

Interestingly, sales of petroleum products have seen a 4.0 percent increase compared to the previous year. In the first eight months, sales reached 10.55 million tonnes, up from 10.18 million tonnes during the same period last year.

According to PKRevenue, in addition to petrol and HSD, the government has also revised upwards the PL on other petroleum products for the current two-week period. The PL on kerosene oil has been increased by Rs10.96 per litre, light diesel oil (LDO) by Rs7.75 per litre, and HOBC by Rs50 per litre.

Official documents reveal that the ex-refinery price of petrol was expected to increase by Rs9.53 per litre. This is despite a reduction in the average of platts (a benchmark price) along with incidentals and duty by Rs12.71 per litre (from Rs173.33 to Rs160.61 per litre), and a Pakistan State Oil (PSO) exchange adjustment levy of Rs3.18 per litre.

Furthermore, the IFEM (Inland Freight Equalisation Margin) on petrol has decreased slightly by 46 paisa, from Rs5.79 to Rs5.33 per litre.

Similarly, the ex-refinery prices for HSD have been reduced by Rs9.17 per litre, falling from Rs178.90 to Rs169.73 per litre.

This includes a reduction in the average of platts with incidental and duty by Rs9.36 per litre (from Rs177.56 to Rs168.20 per litre), partially offset by a PSO exchange rate increase of 19 paisa (from Rs1.34 to Rs1.53 per litre).