ISLAMABAD: The government has increased the Inland Freight Equalization Margin (IFEM) by Rs30.21 per litre on high-speed diesel (HSD) and by Rs3.15 per litre on petrol, raising it to Rs8.53 per litre from Rs5.38, to accommodate the losses faced by the Pakistan State Oil following high-cost fuel imports.
Officials said the adjustment comes after a sharp cut in diesel prices on April 11, 2026 when the government reduced HSD rates by Rs134.81 per litre to Rs385.54 from Rs520.35, despite the OMCs importing diesel at about $170 per barrel along with a $40 per barrel premium. The price reduction created financial pressure on OMCs, prompting the increase in IFEM to offset its losses.
In addition, the petroleum levy on petrol has been increased by Rs26.77 per litre to Rs107.38 per litre from Rs80.61 per litre, in line with requirements linked to the International Monetary Fund program. A carbon service levy of Rs2.50 per litre has also been imposed. “The government has cleverly shifted some portion of the petroleum levy which was due on diesel to petrol again on the IMF pressure,” the officials said, adding that no petroleum levy is currently applied to HSD; instead, a CSL of Rs2.50 per litre is being charged. However, they said the HSD levy burden has effectively been adjusted into petrol pricing. Petrol consumers are also being charged IFEM of Rs8.53 per litre.
Consumers are meanwhile bearing the highest petroleum levy on high octane blending component (HOBC) which stands at Rs305.37 per litre, in addition to a CSL of Rs2.50 per litre. The petroleum levy on kerosene oil is Rs20.36 per litre, while on light diesel oil (LDO), it stands at Rs15.84 per litre. For furnace oil, the petroleum levy is Rs82,007 per ton, pushing its price to around Rs330,000 per ton. The officials said this has made furnace oil-based electricity generation unviable, leading the Power Division to largely move away from its use. As a result, electricity produced from furnace oil now costs about Rs75 per unit, which is 134% higher than the current average tariff.
