Diesel price cut by PKR 14 per liter in Pakistan

Pakistan has reduced the price of diesel by PKR 14 per liter for the next two weeks, according to an official notification issued on Monday.

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

According to the Ministry of Finance notification, the price of petrol has been kept unchanged at PKR 263.45. The new price of high-speed diesel will be PKR 265.65, down from PKR 279.65

The new prices will take effect on December 16.

The massive reduction in the price of diesel is expected to lower food prices as most farmers rely on diesel-powered tractors to plough their fields. It will also lower the transportation cost, further easing the impact of inflation.

The government has reduced the prices due to lower oil prices in the global market.

Data shows global diesel prices fell by $7 per barrel during the review period to about $84, while petrol prices dipped only slightly — by about 50 cents — to $79.25 per barrel.

Earlier, on November 30, the price of petrol was reduced by PKR 2 and that of high-speed diesel by PKR 4.79 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 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. At present, the PDL on diesel is around PKR 77 per liter and that on petrol PKR 78 per liter. 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.

Earlier this year, Pakistan increased PDL on petrol by PKR8 per liter and on diesel by PKR 7 per liter.

Last week, the country’s top economic decision-making body also proposed an increase in the profit margin of oil marketing companies (OMCs).

The Economic Coordination Committee (ECC) had capped the increases between 5% and 10%, half of which will be paid immediately.

The remaining half will be conditional on the digitization progress of the financial transactions of OMCS. The Petroleum Division will submit a report on digitization by June 1, 2026.