Islamabad, June 12, 2025 – Brace yourselves, Pakistan! A storm is brewing at the fuel pump as the government has now armed itself with unrestricted power to impose unlimited petroleum levy on fuel products.
With no legal ceiling in place, petroleum prices in the upcoming fiscal year 2025-26 may skyrocket beyond expectations.
The explosive move comes through a critical amendment in the Finance Bill, 2025, which proposes the removal of the Fifth Schedule to the Petroleum Levy Ordinance. Previously, this schedule served as the last line of defense—setting a maximum limit on the petroleum levy that the federal government could charge. Now, with its deletion, the government enjoys total liberty to increase the petroleum levy to any extent, whenever it pleases.
In simpler terms: there is no cap, no upper limit, and no restriction. The doors are wide open for limitless levy hikes on every liter of petroleum products you buy. This could trigger a chain reaction of price increases across the economy, slamming households, transporters, and industries alike.
But that’s not all.
In a double whammy, the Finance Bill also introduces a new carbon levy on petrol, high-speed diesel, and furnace oil—on top of the already ominous petroleum levy. Starting in fiscal year 2025-26, the carbon levy will be Rs. 2.5 per liter, escalating to Rs. 5 per liter in 2026-27. Furnace oil (Bunker ‘C’) will also be slapped with both petroleum levy and carbon levy, further inflating energy costs.
The government defends the carbon levy as a measure to curb excessive fossil fuel use and raise critical funds for climate initiatives. But critics argue it’s a recipe for inflation and economic pain, especially for the lower and middle income classes.
With no upper limit on levies, and multiple new charges stacking up, one thing is clear—petroleum products in Pakistan are about to get significantly more expensive.