Govt Plans to Increase Petroleum Levy in Upcoming Budget
The federal government has decided to remove the cap on the Petroleum Development Levy (PDL) to charge a levy of over Rs. 100 per liter and generate Rs. 194 billion from the next fiscal year 2025-26.
Sources told that Pakistan will increase the PDL beyond the current level of Rs. 78 per liter on petroleum products, including petrol and diesel, to help bridge the revenue gap in the Federal Board of Revenue (FBR).
This would mark the highest petroleum levy ever imposed in Pakistan’s history and reflects a significant increase from the current fiscal year’s estimated collection of Rs. 1,117 billion.
The levy will also support subsidies for the power sector and the emerging electric vehicle industry.
Since July 2024, the government has raised the PDL from Rs. 60 to Rs. 78 per liter, generating over Rs. 1 trillion in tax revenue within the first 10 months of the current fiscal year.
The government is aiming to collect over Rs. 1,100 billion through the petroleum levy this fiscal year. So far, from July 2024 to March 2025, it has collected around Rs. 833.8 billion. For comparison, the total collection was Rs. 1,019 billion in the previous fiscal year and Rs. 580 billion the year before that.
Sources say the government has also agreed with the IMF to remove the 10% limit on the Debt Service Surcharge added to electricity bills. This cap currently limits how much power companies can charge to recover their costs. Removing it is part of efforts to reduce the country’s growing circular debt in the energy sector.
The IMF report on Pakistan mentions that the government will pass a law by June 2025 to officially remove this limit. The plan is to reach a point where no new circular debt is added by the end of the fiscal year through regular price adjustments, focused subsidies, and cutting unnecess costs.
