Sindh Assembly Passes Resolution Seeking Abolition of Petroleum Levy
KARACHI, PAKISTAN — WEB DESK: The Sindh Assembly on Tuesday passed a resolution calling on the federal government to abolish the petroleum levy, intensifying political pressure for relief from rising fuel prices as petrol climbed to Rs358.77 per litre.
The resolution was moved by Sindh Home Minister Zia-ul-Hassan Lanjar during a session chaired by Speaker Awais Qadir Shah. Lanjar acknowledged that the provincial government does not have the authority to abolish the levy because petroleum taxation falls within the federal domain.
He argued, however, that the provincial legislature could formally call on Islamabad to withdraw the levy and reduce the financial pressure faced by consumers.
Sindh Assembly Calls for Relief From Fuel Costs
Speaking during the session, Lanjar said the petroleum levy was placing an additional burden on ordinary citizens already struggling with high living costs.
The resolution therefore urged the federal government to abolish the levy and provide relief to consumers.
The measure represents a formal political recommendation from the provincial assembly. It does not itself abolish or reduce the petroleum levy, because Sindh does not control the federal levy.
Any actual change would require action by the federal government.
Petrol Jumps Rs12.90 to Rs358.77
The Sindh Assembly’s move comes on the same day Pakistan’s latest fuel-price increase took effect.
The federal government raised petrol by Rs12.90 per litre, taking the price from Rs345.87 to Rs358.77 per litre.
High-speed diesel was increased by Rs3.72 per litre, from Rs378.05 to Rs381.77 per litre.
The sharp petrol increase has renewed concerns over household expenses, transport costs and the wider inflationary impact of expensive energy.
International petroleum prices have been under pressure amid the US-Iran conflict and disruption around the Strait of Hormuz, increasing Pakistan’s exposure as an energy-importing economy.
How Much Petroleum Levy Is Being Charged?
According to the latest Petroleum Division pricing details reported by Business Recorder, the federal government is currently charging a petroleum levy of Rs80 per litre on both petrol and high-speed diesel.
A separate Climate Support Levy of Rs5 per litre is also being charged on both products.
Customs duty stands at Rs21.02 per litre on petrol and Rs15.68 per litre on high-speed diesel, according to the September 8 price structure.
Dealer margins and oil marketing company margins are also included in the final retail price.
This means eliminating the petroleum levy could theoretically create substantial room for reducing retail prices if other components remained unchanged. However, the actual reduction would depend on a federal government decision and how it restructures taxation and revenue requirements.
Petroleum Levy Is Major Source of Federal Revenue
The levy has become an increasingly important source of government revenue.
Official figures submitted to the National Assembly show that the federal government collected approximately Rs1.205 trillion in petroleum levy between July 2025 and March 2026 alone.
The IMF-linked fiscal framework has also placed significant revenue expectations on petroleum taxation. The petroleum levy target for FY2026-27 has been reported at around Rs1.73 trillion.
That revenue dependence means completely abolishing the levy would have significant consequences for the federal budget unless Islamabad replaced the lost revenue through other taxes, spending reductions or fiscal measures.
The Sindh Assembly’s demand therefore raises both a consumer-relief question and a broader fiscal-policy challenge.
Government Already Discussing Levy Relief With Jamaat-e-Islami
Pressure for reducing petroleum taxation is not limited to Sindh.
The federal government and Jamaat-e-Islami agreed last week to establish committees to examine options for reducing the petroleum levy and providing relief to consumers.
Planning Minister Ahsan Iqbal said the government would constitute an expert committee, while JI would form a corresponding committee to develop recommendations.
The government said it was prepared to consider proposals aimed at reducing the burden on the public.
The Sindh Assembly resolution now adds institutional pressure from Pakistan’s second-largest province to that wider debate.
Fuel Prices Have Changed Frequently
Pakistan’s petroleum market has also undergone a major change in pricing frequency.
Petroleum Minister Ali Pervaiz Malik announced in July that fuel prices would be determined more frequently because of volatility in international markets following renewed US-Iran hostilities.
Recent changes illustrate the volatility.
Petrol stood at Rs342.79 per litre on September 1, rose to Rs343.87 on September 2 and Rs349 on September 4, fell to Rs345.87 for September 5-7, and then jumped to Rs358.77 on September 8.
Diesel has also fluctuated substantially during the same period.
Such frequent adjustments have created uncertainty for consumers and businesses whose costs depend heavily on fuel.
Higher Fuel Prices Raise Inflation Concerns
Petroleum prices have broad implications for Pakistan’s economy because fuel costs feed into road transport, agriculture, manufacturing and distribution.
Higher diesel prices can increase the cost of moving food and other commodities between farms, ports, factories, warehouses and retail markets.
The All Pakistan Goods Transport Alliance has already announced a 5% increase in freight charges following recent fuel-price increases and has threatened another nationwide strike if its outstanding demands are not addressed.
Higher transport costs can eventually be passed through supply chains to consumers, increasing inflationary pressure.
Resolution Does Not Immediately Change Petrol Prices
For consumers, the most important distinction is that Tuesday’s Sindh Assembly resolution is a demand, not a change in federal tax policy.
The petroleum levy remains in place, and the current notified prices of petrol and high-speed diesel have not been reduced because of the provincial resolution.
Petrol therefore remains at Rs358.77 per litre, while high-speed diesel stands at Rs381.77 per litre under the September 8 notification.
The next development will depend on whether the federal government responds to the Sindh Assembly’s demand and whether ongoing political negotiations produce an agreement to reduce the levy.
