ISLAMABAD: The government will take the public and parliament into confidence regarding the process of adjusting petroleum product pricing, which would help the administration in sustaining public and political support during periods of high prices, according to sources in the finance ministry.
The News has learnt that the government has devised a strategy to minimise rising import costs by maintaining the prices of petroleum products without lowering the rate of petroleum levy. This will prevent demand from rising.
The finance ministry sources said the government should establish a transparent formula for petroleum products, including the petroleum levy. Committing to planned petroleum levy rates and communicating any changes to the public and parliament could help maintain political support even at the times of oil price hikes, they added.
“Higher global oil prices increase the import bill, which can be managed by rationing demand through higher prices. By lowering the petroleum levy during periods of high oil prices, consumption inadvertently rises above optimal levels. Therefore, the government plans to maintain transparency and consistency in petroleum levy rates for effective fiscal management and building public trust.”
According to sources, the finance ministry is of the view rising global oil prices increase the import bill. It can be controlled through rationing by keeping prices of petroleum products high.
High prices of petroleum will prevent an increase in demand for its products, which will help prevent any raise in import bill.
Sources said reducing petroleum levy at a time of high oil prices will increase consumption. The government plans to maintain consistency and transparency in petroleum levy rates for effective fiscal management, the sources said.
The government last month increased the petroleum levy on petrol and high-speed diesel by Rs10 per litre (from Rs60 to Rs70). Kerosene oil is subject to a petroleum levy of Rs10.96 per litre and light diesel oil Rs7.75 per litre.
As part of additional levy, the federal cabinet approved a reduction in the prices of electricity by Rs1.71 per unit for three months (April to June 2025).