Govt rules out immediate fuel levy cut

ISLAMABAD: Planning Minister Ahsan Iqbal has ruled out an immediate reduction in the petroleum levy despite pressure from Jamaat-e-Islami (JI), saying the government may consider a gradual cut in the next federal budget.

Iqbal said a committee had been formed to examine proposals for reducing the levy in phases. The committee will include Deputy Prime Minister Ishaq Dar, Planning Minister Ahsan Iqbal and Rana Sanaullah from the government, while Jamaat-e-Islami will nominate three representatives.

Speaking to the media on Thursday, Iqbal said both sides would discuss possible measures to provide relief to the public while protecting the country’s economic stability.

The development comes as JI continues its campaign against high petroleum taxes amid rising global oil prices linked to the ongoing conflict in the Middle East. A JI delegation also met Prime Minister Shehbaz Sharif earlier this week to discuss the issue.

Iqbal said the government was trying to provide relief within its limited financial resources. However, he warned that Pakistan could not afford policies that might undermine the economic stability achieved after considerable difficulty.

He noted that global oil prices remained uncertain and could rise further depending on developments in the Middle East. Governments worldwide were taking precautionary measures to limit the economic impact of the crisis, he added.

Iqbal cautioned against making decisions to gain immediate public approval if they could trigger a larger economic problem later. He said the government needed to prioritise national interests and adopt policies that would minimise the impact of international economic uncertainty.

The government currently imposes a petroleum levy of Rs80 per litre, a climate levy of Rs5 per litre and customs duty of Rs20.56 per litre. These charges bring the total taxes on fuel to nearly Rs106 per litre.

The minister also highlighted a relief programme for low-income groups, saying approximately 12.7 million people had registered for the scheme.

Meanwhile, Petroleum Minister Ali Pervaiz Malik informed the National Assembly that the government collected Rs4.4 trillion through the petroleum levy between fiscal years 2022-23 and 2025-26.

The collection exceeded the government’s target of Rs4.2 trillion by approximately Rs227 billion. During the last fiscal year, the provisional collection reached Rs1.567 trillion against a target of Rs1.468 trillion.

The government has set a petroleum levy collection target of Rs1.676 trillion for the current fiscal year.

Malik said petroleum levy collection was also linked to the fiscal targets agreed with the International Monetary Fund under its Extended Fund Facility programme.

In May, the petroleum minister had reportedly recommended reducing the annual collection target to Rs1 trillion and setting the levy at Rs50 per litre because of elevated international oil prices. However, the government did not adopt the proposal.

The National Assembly was also informed that Pakistan had sufficient petrol and high-speed diesel stocks to meet domestic demand.

Malik said the Oil and Gas Regulatory Authority was monitoring the supply chain in coordination with refineries, oil marketing companies and relevant government departments to ensure uninterrupted supplies.

For September 2026, petrol demand was projected at approximately 692,000 tonnes, while domestic refineries were expected to provide 262,000 tonnes. Oil marketing companies had planned imports of around 511,000 tonnes to meet the anticipated demand.

No high-speed diesel imports were planned for the month because of sufficient opening stocks and expected domestic refinery supplies of approximately 555,000 tonnes.

As of September 22, petrol stocks stood at around 395,000 tonnes. An additional 56,000 tonnes of cargo was at berth, while another 55,000 tonnes was at outer anchorage in Pakistani waters. Total available supplies consequently reached approximately 506,000 tonnes, enough for around 22 days at average daily sales of 22,500 tonnes.

High-speed diesel stocks stood at approximately 568,000 tonnes, equivalent to about 30 days of cover at average daily consumption of 19,000 tonnes.

The minister said petrol and diesel consumption remained broadly in line with projections, with only minor variations. Oil marketing companies had been directed to investigate unusual sales at retail outlets to prevent hoarding, diversion and misuse of fuel.

The petroleum minister also disclosed that Rs66.5 billion in Price Differential Claims submitted by oil marketing companies remained outstanding.

According to the minister, the government had disbursed Rs53.8 billion out of total claims worth Rs120.3 billion. Further payments would depend on the submission of complete documentation and verification of claims.

The Oil and Gas Regulatory Authority is reviewing the claims. The remaining payments will be released after the required checks, including an audit by an auditor appointed for the purpose.

The government has initiated the process of selecting an auditor, while further disbursements will be subject to the completion of the verification process.

The proposed committee’s discussions will determine whether a phased reduction in petroleum levy rates can be accommodated in the next budget without putting additional pressure on the country’s finances.