Pass on Full Benefit of Falling Oil Prices to Consumers Instead of Retaining High Fuel Taxes: BMP

By Muhammad Shahzad | Lahore, Pakistan
LAHORE: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI)’s Businessmen Panel (BMP) has urged the federal government to pass on the full benefit of declining international crude oil prices to consumers, businesses and industries instead of maintaining a heavy tax burden on petroleum products.
BMP Chairman and former FPCCI President Mian Anjum Nisar said cheaper fuel is the quickest and most effective way to reduce production costs, curb inflation and revive economic activity.
He noted that international crude oil prices have largely returned to pre-Middle East conflict levels, yet Pakistani consumers and industries have received only limited relief. Despite the decline in global oil prices, the government recently reduced petrol and diesel prices by only Rs1.97 per litre, while continuing to retain much of the benefit through petroleum levies.
According to official price breakdowns, nearly 29 percent of the retail price of petrol and diesel still consists of taxes and levies. Petrol currently carries around Rs88 per litre in taxes, while diesel bears more than Rs91 per litre, significantly increasing transportation costs, industrial expenses and inflation across the economy.
Mian Anjum Nisar acknowledged the government’s introduction of the Climate Support Levy under its fiscal reform programme but stressed that environmental initiatives should not come at the expense of industrial competitiveness, economic growth or the purchasing power of ordinary citizens. He called on the government to review all petroleum-related levies, including the Climate Support Levy, and gradually reduce the overall tax burden as global oil prices decline.
He observed that domestic fuel prices rise almost immediately whenever international crude prices increase, but when global prices fall, consumers and businesses receive only partial relief because much of the benefit is absorbed through taxes. This pricing approach, he said, deprives the economy of lower energy costs and weakens business confidence.
The BMP chairman pointed out that Pakistan’s industrial sector is already struggling with high electricity tariffs, expensive borrowing, rising raw material costs and declining competitiveness in export markets. Since fuel is a key input for manufacturing, agriculture, transport and logistics, lower petroleum prices would reduce production costs throughout the supply chain, benefiting exporters, manufacturers, traders and consumers alike.
He added that Pakistan’s exporters face intense competition from regional economies where industries enjoy lower energy and logistics costs. To boost exports, create jobs and attract investment, the government must ensure that reductions in international oil prices are fully reflected in domestic fuel prices.
Lower fuel prices, he said, would also reduce freight charges, transportation expenses and distribution costs. The agriculture sector would benefit through lower operating costs for tractors, tube wells, harvesting machinery and the transportation of farm produce, while consumers would gain from more stable prices of essential commodities.
Mian Anjum Nisar said the government’s fiscal requirements are understandable but stressed that economic policy must strike a balance between revenue generation and growth. Excessive reliance on petroleum taxes may provide short-term revenue but increases production costs, discourages investment and weakens the competitiveness of local industry.
He reaffirmed the business community’s support for reforms aimed at strengthening Pakistan’s economy and improving fiscal discipline, but emphasized that such reforms should not undermine productive sectors that generate employment, exports and tax revenues. Every rupee saved through lower fuel prices, he said, circulates through the economy by reducing business costs, lowering transport fares and increasing purchasing power.
The BMP chairman urged the government to introduce a transparent petroleum pricing mechanism that automatically transfers the benefits of lower international crude oil prices to domestic consumers. He said predictable, market-based pricing would improve investor confidence, help businesses plan more effectively and strengthen Pakistan’s competitiveness in regional and global markets.
Expressing optimism, Mian Anjum Nisar said meaningful reductions in petroleum prices would accelerate industrial production, support small and medium-sized enterprises (SMEs), enhance export competitiveness and help contain inflation. He concluded that lowering the cost of doing business by fully passing on global oil price reductions is essential for achieving sustainable and inclusive economic growth in Pakistan.