The federal government of Pakistan may miss its target to collect Rs 1,161 billion in petroleum levy this fiscal year. The recent surge in global oil prices, triggered by the Israel-Iran conflict, has pushed up fuel costs both internationally and domestically. This increase threatens the government’s expected revenue from fuel taxes.
After Israel’s attacks on Iran, petrol prices jumped by $1.98 per barrel, while diesel prices rose by $2.54 per barrel. As a result, petrol prices in Pakistan are expected to rise by Rs 4.38 per litre, and diesel by Rs 5.02 per litre starting June 16. Experts warn these higher prices could reduce fuel consumption and lower government revenue from petroleum levies.
By March 2025, Pakistan had collected Rs 834 billion in petroleum levy, reaching only 71% of the revised target. Market analysts now warn that the growing fuel costs may make it difficult to achieve the Rs 1.4 trillion target set for the next fiscal year. This shortfall could impact other government development plans.
In addition to fuel price hikes, customs duties on petrol and diesel will increase slightly. The dollar exchange rate is expected to rise from Rs 282.20 to Rs 282.49, adding to overall fuel costs. Furthermore, Pakistan State Oil (PSO) may increase pump prices, which could lead to further price rises for consumers.
Since March 2025, the government imposed an additional petroleum levy of Rs 18.02 per litre on petrol and Rs 17 per litre on diesel by abolishing a previous cap. This move aims to generate Rs 90 billion every quarter and Rs 300 billion annually based on current fuel use. The Finance Division will announce final fuel prices on June 15 after reviewing global market data.