We’re witnessing a unique war of words over how to explain Pakistan’s economy. Like oxygen, the debate over fuel prices seems almost as important as someone’s salary.
Interior Minister Mohsin Naqvi a short while ago backed Petroleum Minister Ali Pervaiz Malik’s analysis that petrol could reach Rs. 1,000 per litre. He said the minister’s concern is valid and that petrol is already unavailable in several countries.
That is fair as far as it goes. But it does not answer the bigger question: how much of the global shock should the public carry when the government itself collects a large amount from every litre? The fuel quotas for cabinet members and who gets free petrol? The public is under a lot of stress.
80%
Petroleum Minister’s 80 percent figure was a tricky move. Still, his statement is borderline defensible.
The 80 percent figure appears particularly close to the movement in Dubai crude. It was around $69.49 per barrel on February 27, while OGRA’s latest pricing calculation uses a Dubai crude Platts average of $124.24. This shows an increase of nearly 79 percent.
IMF Levy
The IMF itself describes this pricing mechanism and says Pakistan has committed to aligning domestic fuel prices with international markets.
So Ali bhai is not simply wrong. The crude-price shock is real. But that argument cannot end the discussion.
At current OGRA pricing, a significant amount of the pump price is made up of government taxes:
| Component | Petrol | HSD |
|---|---|---|
| Petroleum Levy | Rs. 80.00 | Rs. 80.00 |
| Climate Support Levy | Rs. 5.00 | Rs. 5.00 |
| Customs Duty | Rs. 19.59 | Rs. 15.68 |
| Total Taxes & Duties | Rs. 104.59 | Rs. 100.68 |
| Price Before Taxes & Duties | Rs. 284.55 | Rs. 323.36 |
| Current Market Price | Rs. 389.14 | Rs. 424.04 |
OGRA’s pricing system explicitly incorporates these charges alongside the international oil benchmark.
This is where the government’s own fuel consumption becomes relevant. When motorists are paying nearly Rs. 400 per litre, taxpayer-funded fuel for official vehicles should be questioned as well.
The government has already moved to reduce fuel allocations for official vehicles, but the question is whether non-essential government fuel should continue to receive different treatment from everyone else.
There is also a common misconception that the “IMF levy” is an IMF tax. It is not. The petroleum development levy is a Pakistani government revenue measure. The FY2026-27 budget targets Rs. 1.677 trillion from petroleum levy collections.
The IMF angle also matters, but differently. It has time and again said fuel-price subsidies are fiscally unsustainable and that any response to high fuel prices should be targeted, temporary and budget-neutral.
That leaves Pakistan with a much harder question than whether the Petroleum Minister is right or wrong.
Reciprocate
If the government expects the public to absorb global oil shocks, should government fuel privileges also be reduced to the same standard? Both sides need to see the same side of the coin. The same reality.
And when the next supply shock arrives, part of the fiscal space created by petroleum levies could be used to cushion consumers from the impact. Treating the levy purely as a revenue source while households and businesses absorb every price shock is difficult to justify.
Those are the issues the government now needs to take care of.
The views expressed here belong to the author.
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