Petrol prices set to rise in budget 2025-26

Pakistanis should brace for a significant hike in fuel prices, as the government prepares to unveil the Budget 2025-26 with strict revenue-boosting measures. Among the most impactful proposals is a plan to raise the Petroleum Development Levy (PDL) to Rs100 per litre on petrol and diesel, which could push petrol prices up to around Rs275 per liter.

“Motorists across the country of 242 million may soon face sharp increase in fuel costs as federal government plans to raise Petroleum Development Levy (PDL) to one hundred per litre in upcoming budget for fiscal year 2025–26.”

This increase is part of the government’s strategy to meet its fiscal commitments under the International Monetary Fund’s (IMF) Extended Fund Facility, which could take effect from July 2025.

Petrol Price in Pakistan

The current PDL stands at Rs78.20 per litre. With an expected increase of Rs21.80 and a proposed Rs5 per litre carbon levy, “the total government levy on petrol” could climb to Rs105 per litre. Diesel, currently priced at Rs254.64, may also rise sharply, possibly nearing Rs290–295 once the new levies take effect.

Despite falling international oil prices, “for third time in two months, the federal government has not passed on full benefit of lower global oil prices.” While petrol prices remained at Rs252.63 in May 2025, diesel was reduced slightly by Rs2.

Adding to the strain, the Inland Freight Equalisation Margin (IFEM) on fuel was increased to help recover Rs34 billion in industry losses due to tax changes in the Finance Bill 2024-25. This change is set to continue for 12 months. As a result, “despite zero GST, consumers still pay about Rs96 per litre in combined levies, customs duties, and dealer margins on petrol and diesel.”

“Pakistan Petroleum Dealers Hint At Closing Petrol Pumps” if relief is not provided, raising concerns about potential fuel supply disruptions in the near future.