Government raises petroleum levy, impacting fuel prices in Pakistan

Petroleum Levy Hike: Pakistan Denies Fuel Price Relief to Consumers

The federal government recently announced a significant Petroleum Levy hike on both petrol and high-speed diesel (HSD). This decision effectively denies consumers any immediate fuel price relief. Consequently, pump rates will remain unchanged for the upcoming fortnight, despite a global downturn in oil prices. This move has raised concerns about the ongoing Pakistan fuel prices increase.

Understanding Pakistan’s Petroleum Levy Hike

The government has adjusted the Petroleum Levy, strategically absorbing potential benefits from the international market. Specifically, the levy on petrol saw an increase of Rs. 4.62 per litre. Furthermore, the PL on high-speed diesel climbed by Rs. 0.8 per litre. These changes directly impact the final cost for motorists across Pakistan.

Pakistan government increases petroleum levy on fuel

Previously, the total PL on petrol and High Octane Blending Component (HOBC) stood at Rs. 79.62 per litre. Now, this combined levy has risen to Rs. 84.27 per litre. Similarly, the PL on HSD has increased from Rs. 75.41 to Rs. 76.21 per litre. Therefore, this move significantly adds to the overall fuel expenses, contributing to the petrol price hike impact on daily budgets.

Beyond the Levy: Other Fuel Charges

Beyond the primary Petroleum Levy, consumers also face additional mandatory charges. For instance, the government continues to impose a Climate Support Levy (CSL). This levy of Rs. 2.5 per litre applies to petrol, HSD, and HOBC. Furthermore, it highlights a broader taxation strategy influencing overall Pakistan fuel prices.

Breaking down the basics of fuel and energy taxes

Detailed Breakdown of Additional Levies:

Climate Support Levy (CSL): Rs. 2.5 per litre on petrol, HSD, and HOBC.
Kerosene Oil PL: Consumers pay a PL of Rs. 2.36 per litre.
Light Diesel Oil (LDO) PL: This fuel includes a PL of Rs. 15.84 per litre.

Another crucial component is the Inland Freight Equalization Margin (IFEM). This margin aims to standardize fuel prices nationwide. Currently, the IFEM is set at Rs. 8.97 per litre for petrol and Rs. 7.25 per litre for HSD. These cumulative charges contribute significantly to the elevated fuel costs experienced by many, particularly impacting the high-speed diesel levy Pakistan.

Federal government implements carbon levy

Economic Impact & Future Outlook for Fuel Costs

Industry experts have weighed in on the recent adjustments. They suggest that while the increased levy boosts government revenue collection, it simultaneously places a heavier financial burden on both consumers and transporters. Consequently, these groups face higher operational costs, even with falling global oil prices. This approach ensures government revenue fuel tax remains robust.

Image of excise tax returns for fuel

The government’s decision effectively negates the opportunity for lower pump rates, a scenario many had hoped for. In contrast, this ongoing policy choice prioritizes fiscal stability over immediate consumer savings. Therefore, the long-term economic impact of the Petroleum Levy hike remains a key concern for many citizens and businesses across Pakistan.

Alert: Fuel price increases expected next week