IFEM on petrol, diesel hiked by Rs1.87 per litre

ISLAMABAD: After consultation with the prime minister, the government has increased the IFEM (Inland Freight Equalisation Margin) by Rs1.87 per litre for the next 12 months to cope with the Rs34 billion losses to refineries and oil marketing companies (OMCs) till June 30, 2025.

The refineries and OMC face a huge loss because of the sales tax exemption on petrol, diesel, kerosene oil and light diesel oil. This not only made upgrade projects unviable but also increased the operational cost of refineries and OMCs because of no input sales tax adjustments. “The increase in IFEM will be adjusted in the relief from May 16, 2025 on account of reduction in POL prices in the international market,” a senior official told The News. However, the PM deferred the hikes in OMCs and dealers’ margins.

The ECC meeting of May 13 endorsed the hike by Rs4.12 per litre in principle as suggested by the Petroleum Division, but it was decided that the final decision would be taken by the prime minister. Now the prime minister has agreed to increase the hike in IFEM for the next 12 months to cope with the loss refineries sustained in the whole current FY25. He, however, sought more consultation on increasing OMCs and dealers’ margins. More importantly, the ECC meeting has also increased the cap or ceiling of the Petroleum Levy up to Rs90 per litre. The Petroleum and Finance divisions have been authorised to decide after the PM’s approval. Earlier, the upper cap for the Petroleum Levy was set at Rs70 per litre which was increased to the prevailing Rs78.02 per litre. The levy on high-speed diesel stands at Rs77.01 per litre.