Govt Hikes Petroleum Levy as Global Oil Dips

Last night, the federal government revised petroleum prices for the upcoming fortnight. Despite a dip in international crude oil prices that would have allowed for a price cut, the government opted to keep retail prices unchanged, effectively absorbing the potential relief by increasing the Petroleum Levy (PL).

Here is the breakdown of the fuel price update for January 16 to January 31, 2026:

Petrol (Motor Spirit – MS)

The price of petrol remains steady at PKR 253.17 per liter.

• Refinery Price Drop: The ex-refinery price actually decreased by PKR 4.57/liter due to the global oil price dip.
• Levy Increase: Instead of passing this benefit to consumers, the government increased the Petroleum Levy by PKR 4.65/liter, bringing it to PKR 84.27 per liter.
• Margins & IFEM: The Inland Freight Equalization Margin (IFEM) saw a minor decrease of PKR 0.08/liter, while OMC margins remained unchanged at PKR 7.87/liter.

High-Speed Diesel (HSD)

The price of diesel also remains unchanged at PKR 257.08 per liter.

Limited Relief

The ex-refinery price of diesel slightly dropped by PKR 0.69. However, the government similarly adjusted the petroleum levy to keep the final price at the pump static.

Petroleum Levy Adjustment

Petroleum Levy on High-Speed Diesel (HSD) increased by PKR 0.80 per liter, bringing the total to PKR 76.21 per liter. However, this was offset by a combined reduction of PKR 0.11 in the Inland Freight Equalization Margin (IFEM) and Extra Margin.

These marginal adjustments successfully neutralized the levy hike, leaving the final consumer price for diesel unchanged.

Summary of Current Fuel Prices:

The decision to maintain prices is largely seen as a move to meet revenue targets and manage the circular debt in the gas sector, despite the downward trend in the global market, where crude oil is currently hovering around $60/barrel.