Higher petroleum levy offsets much of the decline in global diesel prices, keeping retail fuel prices elevated.

ISLAMABAD, August 7, 2026: The federal government has increased the petroleum levy (PL) on high-speed diesel (HSD) for the second consecutive day, further limiting the benefit of declining international oil prices for consumers despite mounting criticism over the high tax burden on petroleum products.

Official daily petroleum pricing documents show that the petroleum levy on HSD has been raised to Rs73.47 per litre on August 7, up from Rs72.26 per litre on August 6 and Rs70.82 per litre on August 5. The increase comes even as global diesel prices continue to ease, lowering Pakistan’s import cost for the fuel.

Import Cost Continues to Decline

The ex-refinery/import price of HSD declined steadily over the three-day period, reflecting softer international diesel prices.

The import price fell from:

• Rs288.97 per litre on August 5,

• to Rs285.53 per litre on August 6,

• and further to Rs282.82 per litre on August 7.

Despite the reduction in the underlying import cost, the government opted to increase the petroleum levy, absorbing part of the available price relief rather than passing it on entirely to consumers.

Retail Diesel Prices See Limited Reduction

As a result, retail HSD prices fell only modestly over the period:

Date	HSD Retail Price
August 5	Rs385.86 per litre
August 6	Rs383.86 per litre
August 7	Rs382.36 per litre

The limited decline in retail prices contrasts with the larger reduction in import costs, highlighting the impact of the higher petroleum levy.

Petrol Levy Remains Unchanged

The government maintained the petroleum levy on petrol at Rs80 per litre throughout the three-day period.

Petrol prices moved in line with changes in import costs:

• Rs328.56 per litre on August 5,

• Rs333.01 per litre on August 6,

• Rs329.82 per litre on August 7.

Unlike diesel, the levy on petrol remained unchanged despite fluctuations in international gasoline prices.

Economic Impact of Higher HSD Levy

High-speed diesel is the principal fuel used by heavy transport vehicles, agricultural machinery, buses, railways and industrial equipment. Changes in its price have a direct bearing on freight costs, farming operations and the prices of essential goods.

Economists generally view reductions in HSD prices as an important factor in easing inflationary pressures by lowering transportation and logistics costs across the economy.

Revenue Considerations

The latest adjustment is expected to attract criticism from consumers and businesses, who argue that the government is increasingly relying on petroleum levy collections to strengthen fiscal revenues instead of passing on the full benefit of lower international oil prices.

With sales tax on petroleum products remaining at zero, the petroleum levy has become one of the government’s primary sources of revenue from the petroleum sector. The continued increases in the levy suggest that the government is prioritising revenue mobilisation while limiting the extent of retail fuel price reductions despite softer global oil markets.