The government has reduced petrol prices by Rs10.28 per liter and diesel prices by Rs8.57 per liter from January 1, 2026. The cut follows OGRA’s price review and brings relief to transport users and households. Kerosene and light diesel may also see reductions.
The federal government has lowered key fuel prices for the first two weeks of 2026. According to the Ministry of Energy’s Petroleum Division’s notification, petrol is now Rs253.17 per liter, down Rs10.28 from Rs263.45. High-speed diesel (HSD) is Rs257.08, reduced by Rs8.57 from Rs265.65.
The revision follows recommendations coming from the Oil and Gas Regulatory Authority (OGRA) and reflects international oil prices and exchange rate changes.
Other Expected Fuel Changes
According to sources, kerosene prices may also fall by Rs9 per liter, while light diesel may drop by Rs6.62 per liter. Mainly low-income families and those living in rural areas use these fuels.
Impact on Consumers
Petrol is used in private vehicles, rickshaws, and motorcycles. On the other hand, diesel powers heavy transport, tractors, buses, trucks, and tube wells. It also affects food and goods prices.
Although GST on petroleum is zero, the government charges a petrol levy, a climate support levy (CSL), and customs duties. Distribution margins add about Rs17 per liter to the final price.
Revenue and Market Context
Petrol and diesel are major government revenue sources. The petroleum levy alone brought in Rs1.161 trillion in FY2025 and is expected to rise by 27% to Rs1.470 trillion this fiscal year. Average monthly fuel sales are around 700,000–800,000 tonnes, compared to only 10,000 tonnes for kerosene.
Awaited Approval
The Finance Ministry and the Prime Minister will finalize the rates. The Petroleum Ministry will issue an official notification after approval. Once approved, these reductions will be effective from January 1.
