Consumers in Pakistan are paying over Rs100 per litre in taxes, duties, and margins on petrol and diesel, adding a significant burden on fuel prices. Official documents reveal that despite no sales tax on petroleum products, multiple charges keep prices high for the public.
Breakdown of Petrol and Diesel Costs
According to the latest figures, taxes, duties, and margins account for Rs107.12 per litre on petrol and Rs104.59 per litre on high-speed diesel (HSD). The ex-refinery price of petrol is Rs148.51 per litre, while HSD costs Rs154.06 per litre before any additional charges.
A petroleum levy of Rs70 per litre is imposed on both fuels. Customs duty further adds Rs15.28 per litre on petrol and Rs15.78 per litre on HSD. In addition, oil marketing companies (OMCs) and dealers earn commissions of Rs7.87 and Rs8.64 per litre, respectively.
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Additional Costs and Final Retail Prices
The inland freight equalization margin (IFEM)āa charge meant to balance transport costs across regionsāadds Rs5.33 per litre on petrol and Rs2.30 per litre on diesel. Despite these additional costs, no sales tax is currently being applied to petrol or HSD.
Government’s Decision on Fuel Prices
On March 15, Prime Minister Shehbaz Sharif decided to keep fuel prices unchanged for the next two weeks. While global fuel prices had declined, instead of passing the benefit to consumers, the government opted to divert the relief toward reducing power tariffs.
The Finance Division issued a notification confirming that all petroleum product prices would remain at their current levels.
Impact of High Fuel Taxes
The heavy taxation on petroleum products has a direct impact on inflation, as fuel costs influence transportation, goods pricing, and overall living expenses. The government’s reliance on petroleum levies for revenue has kept fuel prices elevated despite fluctuations in the international market.
With consumers already facing rising electricity and food costs, the high fuel burden adds to economic hardships, making affordability a growing concern. As discussions on energy pricing continue, calls for a more consumer-friendly approach to taxation on petroleum products are increasing.
