Higher levy on high-speed diesel absorbs part of the benefit from falling global oil prices, limiting relief for consumers.
ISLAMABAD: The federal government has increased the petroleum levy on high-speed diesel (HSD), retaining a larger share of the benefit from declining international oil prices instead of passing the full reduction on to consumers.
Official petroleum price calculations issued on August 6, 2026 show that the petroleum levy on HSD has been increased to Rs72.26 per litre, up from Rs70.82 per litre a day earlier.
At the same time, the ex-refinery/import price of diesel fell to Rs285.53 per litre from Rs288.97 per litre, reflecting lower international diesel prices.
Diesel Price Cut Limited to Rs2 Per Litre
Despite the decline in import costs, the retail price of high-speed diesel was reduced by only Rs2 per litre, falling to Rs383.86 per litre on August 6 from Rs385.86 per litre on August 5.
The increase in the petroleum levy absorbed part of the decline in global oil prices that would otherwise have translated into greater savings for consumers.
Petrol Levy Remains Unchanged
The government kept the petroleum levy on petrol unchanged at Rs80 per litre.
However, despite the unchanged levy, the retail price of petrol increased to Rs333.01 per litre on August 6 from Rs328.56 per litre a day earlier, reflecting changes in international gasoline prices and import costs.
Petroleum Pricing Structure
According to the official pricing mechanism, petroleum products remain exempt from sales tax.
The retail price of petrol and diesel currently comprises:
• Ex-refinery or import price
• Customs duty
• Inland Freight Equalisation Margin (IFEM)
• Oil marketing company margins
• Dealer margins
• Petroleum levy
• Climate Support Levy
These components collectively determine the final retail prices notified by the government.
Impact on Inflation and Transport Costs
High-speed diesel is the primary fuel used by Pakistan’s transport, agriculture and industrial sectors, making its price a significant factor in freight charges, food prices and overall inflation.
Typically, lower diesel prices help reduce transportation costs and ease the cost of moving goods across the country. However, by increasing the petroleum levy, the government has limited the extent of the benefit reaching consumers and businesses.
Revenue Boost for the Government
The latest pricing adjustment indicates that while international diesel prices have declined, the government has opted to capture part of the savings through a higher petroleum levy.
The move is expected to strengthen revenue collection from petroleum products while keeping domestic fuel prices at relatively elevated levels, reducing the immediate benefit of lower global oil prices for consumers and commercial users.