Climate Support Levy: Pakistan Doubles Fuel Levy While Keeping Petrol and Diesel Prices Unchanged

ISLAMABAD: The federal government has doubled the Climate Support Levy on petrol and diesel to Rs5 per litre while reducing the Petroleum Levy by the same amount, ensuring that retail fuel prices remain unchanged for consumers.

The Petroleum Division issued notifications late on Wednesday confirming that the revised levy structure came into effect on July 2.

Under the new rates, the Climate Support Levy on petrol, high-speed diesel and the high-octane blending component (HOBC) has increased by Rs2.50 per litre, taking the levy from Rs2.50 to Rs5 per litre.

To offset the increase, the government reduced the Petroleum Levy on petrol, high-speed diesel and HOBC by Rs2.50 per litre. As a result, motorists will continue to pay the same retail prices despite the changes in the tax structure.

The revised levy system follows the government’s fuel pricing framework introduced on July 1.

Last week, the government kept petrol and diesel prices unchanged at Rs299.50 and Rs311.47 per litre, respectively.

Earlier, on June 19, the government announced significant fuel price cuts, reducing the price of petrol by Rs74 per litre and diesel by Rs67 per litre after international oil prices declined and geopolitical tensions in the Middle East eased.

Prime Minister Shehbaz Sharif said the reductions were intended to pass the benefits of lower global oil prices on to consumers.

The earlier relief followed a reported US-Iran peace agreement and the reopening of the Strait of Hormuz, a key global energy shipping route, which helped improve oil supplies and lower crude prices.

Kerosene prices also fell sharply at the time, dropping by Rs48.29 per litre to Rs233.90.

Since then, the government has continued to adjust the fuel levy structure while keeping retail prices largely stable. Under the latest structure, the Petroleum Levy on high-speed diesel stands at Rs79.54 per litre, while the levy on petrol is Rs66.64 per litre. The levy on kerosene remains unchanged at Rs20.36 per litre.