New Petroleum Levy Bill Sets Jail, Fine for Defaulters

The government has tabled a new petroleum levy bill in the National Assembly that would punish oil companies, refineries and other fuel licensees for failing to pay the petroleum levy or the climate support levy. The proposed penalties run to three years in prison, a fine equal to the unpaid amount, or both.

Minister for Parliamentary Affairs Tariq Fazal Chaudhary introduced the Petroleum Products (Petroleum Levy and Climate Support Levy) (Amendment) Bill, 2026. The bill has been referred to the relevant standing committee for review. It is a proposal at this stage, not yet law, and its final form will depend on that committee process and any later vote.

Petroleum levy bill: what the proposal says

The bill would make payment of both levies a condition of every licence issued by the Oil and Gas Regulatory Authority (OGRA). A licensee that fails to pay in full would face the penalties set out in the bill. OGRA would also gain the power to suspend or cancel the licence of a defaulter.

Refineries would have to deposit the levies in advance, before fuel leaves their gates. That change is aimed at closing the gap between fuel sold and money reaching the treasury. Companies would also have to file monthly levy statements, along with an annual audited certificate, with the audit cost borne by the company itself.

Late payment would carry a surcharge. The bill sets the surcharge at 1.5 times the six-month Karachi Interbank Offered Rate (KIBOR), or 12 per cent a year, whichever is higher. The surcharge would be charged daily until the amount is paid.

Directors and partners of a defaulting company could also be held liable. They would escape liability only if they can prove the default happened without their knowledge or consent. That clause puts personal responsibility on company leadership, not just on the company as a legal entity.

What the bill does not change

The bill does not change the rate of either levy. It would not raise or cut petrol and diesel prices on its own. The target is fuel companies, not motorists.

That distinction matters for households. The levy is already charged at the pump, and the bill is about making sure the money collected actually reaches the treasury. For drivers, the direct effect would come only if a company passed on new compliance costs, and the bill itself sets no such price change.

Feature Pakistan has tracked the levy debate through the year, including the earlier decision to hold the levy unchanged, covered in No Immediate Petroleum Levy Cut. Readers who follow fuel prices will also recall the recent jump in diesel costs, covered in Diesel Price Crosses Rs400.

Why the government is moving now

The government aims to collect Rs1.6 trillion from the petroleum levy in the current fiscal year, FY27. Tighter collection is part of its commitments under the International Monetary Fund (IMF) programme, which recently reached a staff-level agreement. That agreement is still pending approval by the IMF Executive Board.

What happens next

Frequently asked questions

What is the new petroleum levy bill?

It is the Petroleum Products (Petroleum Levy and Climate Support Levy) (Amendment) Bill, 2026, tabled in the National Assembly by Minister for Parliamentary Affairs Tariq Fazal Chaudhary and referred to a standing committee.

What penalties does the bill propose?

Failing to pay the petroleum levy or the climate support levy in full could bring up to three years in prison, a fine equal to the unpaid amount, or both. OGRA could also suspend or cancel a defaulter’s licence.

Does the bill raise petrol or diesel prices?

No. The bill does not change the rate of either levy, so it does not raise or cut fuel prices on its own. It targets companies that fail to pay levies they have collected.

Who else could be held liable under the bill?

Directors and partners of a defaulting company could be held liable, unless they prove the default happened without their knowledge or consent.

Is the bill already law?

No. It has been introduced and referred to the relevant standing committee. It would need to pass through parliament before its penalties take effect.