Climate Support Levy on petrol and diesel rises to Rs5 per litre as Petroleum Levy is cut to offset the increase
KARACHI: The federal government has doubled the Climate Support Levy (CLS) on petrol and high-speed diesel to Rs5 per litre while reducing the Petroleum Levy by an equal 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 from July 2, 2026.
Under the new framework, the Climate Support Levy on petrol, high-speed diesel (HSD) and the high-octane blending component (HOBC) has been increased by Rs2.50 per litre, raising the levy from Rs2.50 to Rs5 per litre.
To fully offset the increase, the government has simultaneously reduced the Petroleum Levy on petrol, HSD and HOBC by Rs2.50 per litre. As a result, there will be no change in retail fuel prices, with consumers continuing to pay the existing rates.
The revised levy structure forms part of the government’s updated petroleum taxation framework introduced at the start of the new fiscal year.
The latest move follows the government’s fortnightly fuel price review last week, in which it kept petroleum prices unchanged. Under the current pricing, petrol remains at Rs299.50 per litre, while high-speed diesel continues to retail at Rs311.47 per litre.
Earlier, on June 19, the government announced one of the largest fuel price reductions in recent years, cutting the price of petrol by Rs74 per litre and diesel by Rs67 per litre after a sharp decline in international crude oil prices amid easing geopolitical tensions in the Middle East.
Prime Minister Shehbaz Sharif had said the reduction was intended to pass on the benefit of lower global oil prices to consumers.
The decline in global oil prices followed the US-Iran peace agreement and the reopening of the Strait of Hormuz, a critical global oil shipping route, which helped stabilise energy supplies and ease concerns over supply disruptions.
At the same time, the government reduced the price of kerosene oil by Rs48.29 per litre, bringing it down to Rs233.90 per litre.
Despite keeping consumer fuel prices stable in recent weeks, the government has continued to recalibrate the taxation structure on petroleum products. According to the latest notifications, the Petroleum Levy on high-speed diesel had previously increased from Rs72.97 to Rs79.54 per litre, while the levy on petrol rose marginally from Rs66.25 to Rs66.64 per litre. The Petroleum Levy on kerosene remains unchanged at Rs20.36 per litre.
The government said the revised levy structure is intended to generate additional resources for climate-related initiatives without imposing any additional burden on consumers, as the higher Climate Support Levy has been fully offset through a corresponding reduction in the Petroleum Levy.