A representational image of a man holding a fuel nozzle at a petrol station. — AFP/File
ISLAMABAD: Prime Minister Shehbaz Sharif announced a reduction of Rs80 per litre in petrol price — just a day after the government had notified a steep increase — following a renewed engagement with the International Monetary Fund (IMF) on petroleum levy adjustments.
The petrol price, which had been set at Rs458 per litre on Thursday night, was brought down to Rs378 per litre after the Finance Ministry successfully negotiated partial flexibility from the IMF on the levy component.
Sources said the prime minister’s announcement came immediately after the Finance Ministry’s second round of talks with the IMF during the week. The Fund had initially insisted on maintaining a levy of Rs80 per litre on both petrol and diesel as part of programme commitments.
The development comes against the backdrop of surging global oil prices triggered by the ongoing Iran war, which has significantly increased the import cost of petroleum products. Faced with a sharp rise in diesel prices in particular, the government had earlier decided to double the levy on petrol to offset the burden and keep diesel prices closer to the purchase cost.
As a result, both petrol and diesel prices were raised sharply on Thursday night, with petrol notified at Rs458 per litre and diesel at Rs520 per litre by the finance and petroleum ministers.
However, according to sources, Prime Minister Shehbaz Sharif, who had already expressed concern over the inflationary impact of passing on the full burden to consumers, directed the Finance Ministry to once again take up the issue of petroleum levy with the IMF. This directive followed the IMF’s earlier reluctance, reported on Friday by The News, to ease the levy structure despite the government’s request for consumer relief amid rising oil prices. The prime minister had emphasised that transferring the entire impact of international price hikes to the public would be “too much” and could trigger a significant inflationary spiral. Responding to Pakistan’s renewed request, the IMF agreed to provide limited flexibility by reducing the effective levy burden on petrol. This understanding paved the way for the prime minister’s late-night announcement, bringing immediate relief to the consumers. Officials said the government remains committed to balancing its obligations under the IMF programme with the need to protect the public from external economic shocks, particularly in light of continuing volatility in global oil markets.