Pakistan keeps fuel rate unchanged despite lower global oil prices

Pakistan has kept unchanged the price of petrol and diesel for the next two weeks, in contrast to the expectation of a rate cut due to lower global oil prices.

A Finance Ministry notification issued on Thursday said the price of petrol will remain PKR 253.17 per liter and that of diesel PKR 257.08 per liter.

The government revises the prices of petroleum products every fortnight in line with changes in global oil prices.

Earlier, industry estimates suggested a reduction of PKR 6 per liter in the price of petrol and PKR 5 per liter in the price of diesel for the fortnight beginning January 16 due to lower global oil prices.

Global oil prices have weakened in recent weeks, supporting the expected reduction. International petrol prices fell by $3 to $71.56 per barrel, while diesel declined by $2 to about $77 per barrel.

Earlier, on December 31, the government had trimmed the price of petrol by PKR 10.28 per liter and that of diesel by PKR 8.57 per liter.

Fuel prices in Pakistan are influenced not only by global crude prices but also by the government’s tax structure, particularly the Petroleum Development Levy (PDL).

The decision not to pass on the impact of lower fuel prices to consumers will help the government boost revenue collection, particularly under PDL.

The PDL is a fixed amount per liter levied on petroleum products. It is a key source of non-tax revenue for the federal government because, unlike the general sales tax, which must be shared with provinces under the National Finance Commission Award, the petroleum levy remains entirely in the hands of the federal government.

As part of commitments made under the International Monetary Fund program, Pakistan has gradually increased the levy on petrol and diesel in recent months.

The government can impose a maximum PDL of PKR 90 per liter on petrol and diesel under the Finance Act 2025. Currently, the levy stands at about PKR 79.62 per liter on petrol and PKR 75.41 per liter on diesel.

Even when global oil prices fall, domestic price reductions may be limited if the government chooses to maintain or increase the levy to meet fiscal targets.

Finance Ministry data showed that PDL collections totaled about PKR 372 billion in the first quarter of the current fiscal year, roughly PKR 110 billion higher than in the same period last year.