Petrol in Pakistan 2025 – Govt Cost vs Citizen Price
Every time Petrol in Pakistan 2025, citizens ask the same question: Why are we paying so much? The answer is not as simple as global oil prices. While international crude rates do influence the base price, what truly inflates the final cost are the government levies, dealer margins, freight charges, and new climate taxes.
As of 2025, petrol costs around Rs 266.79 per litre in Pakistan. Out of this, the actual oil cost (ex-refinery price) is about Rs 165.30 per litre. The rest over Rs 100 per litre is added through petroleum levies, climate charges, company & dealer profits, and transportation costs.
This means Pakistanis are not just paying for petrol they are also funding government revenue needs, environmental commitments, and energy subsidies indirectly. Let’s break down the price in detail.
Price Breakdown Petrol in Pakistan 2025
| Component | Amount (PKR) | % of Total Price |
|---|---|---|
| Ex-refinery cost | Rs 165.30 | ~62% |
| Petroleum Development Levy (PDL) | Rs 75.52 | ~28% |
| Climate / Carbon Levy | Rs 2.50 | ~1% |
| Inland Freight Charges | Rs 6.96 | ~2.6% |
| Oil Company (OMC) Margin | Rs 7.87 | ~3% |
| Dealer Margin | Rs 8.64 | ~3.2% |
| Retail Price | Rs 266.79 | 100% |
What is Ex-Refinery Price?
The ex-refinery price is the cost of petrol before taxes and margins. It includes:
- Cost of crude oil imports or local crude purchase.
- Refining charges at local refineries.
- Basic operational costs.
In July 2025, the ex-refinery price stood at Rs 165.30 per litre. This is the real cost of petrol, without government intervention.
The Role of Government Levies
Petroleum Development Levy (PDL)
The PDL is the biggest factor in petrol’s final price. At Rs 75.52 per litre, it forms nearly a third of what you pay. The government uses this levy as a major revenue stream, often to fill budget gaps or to fund subsidies in other sectors.
Climate / Carbon Levy
Introduced in mid-2025 under IMF conditions, the climate levy is Rs 2.50 per litre. Though small, it signals Pakistan’s push toward green financing and climate obligations.
No GST – For Now
Unlike in previous years, petrol currently has 0% GST (General Sales Tax). This helps prevent prices from rising even higher. However, IMF has suggested that Pakistan may eventually reintroduce GST on fuel in the future.
Margins & Transportation Costs
Apart from levies, other hidden costs raise the price:
- Inland Freight Charges (Rs 6.96): Transporting petrol from refineries to depots and fuel stations across Pakistan.
- OMC Margin (Rs 7.87): Profit taken by oil marketing companies like PSO, Shell, Total, etc.
- Dealer Margin (Rs 8.64): Commission given to petrol station owners per litre sold.
Together, these margins and charges make up about Rs 23.47 per litre.
Who Pays What? Govt vs. Citizens
Government’s Share
The government collects more than Rs 100 per litre through levies and charges. These collections directly feed into national revenue. The state uses them to pay IMF commitments, fund energy subsidies, and support other budgetary expenses.
Citizen’s Share
Citizens bear the direct burden at the pump. While the real oil cost is Rs 165, they pay Rs 266 because of government levies and profit margins. For an average commuter, this means spending thousands more every month on fuel alone.
Economic Impact of High Petrol Prices
Inflation
Fuel is a cost driver for almost every product. When petrol prices rise:
- Transport fares go up.
- Food and goods prices increase due to higher logistics costs.
- Overall inflation rises.
Pressure on Middle & Low-Income Groups
Daily wage earners and salaried employees are hit hardest. Petrol can take up to 15-20% of a middle-class household’s monthly budget, leaving less for food, health, and education.
Business & Industrial Costs
Transporters, manufacturers, and service providers pass on higher fuel costs to consumers, further inflating the economy.
Why Govt Keeps Petrol Prices High
Even when international oil prices fall, the government often keeps retail prices high. Why?
- Revenue Needs: PDL is a key income source for the government.
- IMF Commitments: Pakistan is bound by agreements to collect certain revenues through petroleum.
- Currency Pressure: A weak rupee raises the import bill, forcing higher prices.
- Offsetting Electricity Subsidies: Sometimes, govt uses petrol levies to cover subsidies in power and gas sectors.
Comparison: Global Petrol Prices
When compared globally, Pakistan’s petrol price is higher than some oil-producing countries like Saudi Arabia and UAE but lower than many developed nations. The difference is mainly due to government taxation policies.
For example:
- Saudi Arabia: ~Rs 120 per litre equivalent.
- India: ~Rs 310 per litre (due to heavy GST + excise duty).
- Pakistan: Rs 266.79 per litre (driven by levies, not GST).
FAQs
What is the current petrol price in Pakistan?
As of July 2025, the official price of petrol is Rs 266.79 per litre.
Why is petrol so expensive in Pakistan?
Because the government adds levies, margins, and transportation costs on top of the base oil price. Over 40% of the retail price comes from taxes and profits, not oil cost.
How much is the govt levy on petrol?
The petroleum development levy alone is Rs 75.52 per litre, plus Rs 2.50 climate levy, making govt’s total share over Rs 100.
Is sales tax applied on petrol?
Currently, GST is 0%, but the IMF may push for its reintroduction in coming years.
Who gets the dealer and OMC margins?
OMC margins go to oil marketing companies like PSO, Shell, and Total, while dealer margins are commissions for petrol pump owners.
Conclusion
In Pakistan, petrol pricing is not just about crude oil it’s about government revenue policies. While the real cost of fuel is Rs 165 per litre, citizens pay Rs 266 after levies and margins. Over 40% of what you pay goes into government funds, margins, and freight not into oil itself.
For ordinary Pakistanis, this means higher transport, higher inflation, and tighter household budgets. Unless the government reduces levies or subsidies fuel, citizens will continue to bear the brunt of expensive petrol.
