Pakistan Raises Climate Support Levy on Petrol and Diesel Without Changing Retail Prices

The federal government has revised the levy structure on petrol and high-speed diesel by increasing the Climate Support Levy from Rs. 2.50 to Rs. 5 per litre.

The revised rates took effect on July 2, 2026, following a notification issued by the Petroleum Division under the Finance Act 2026.

Petroleum Levy Reduced to Offset the Change

To prevent an immediate increase in fuel prices, the government reduced the Petroleum Levy on petrol and high-speed diesel by Rs. 2.50 per litre.

As a result, the increase in the Climate Support Levy has been offset by a corresponding reduction in the Petroleum Levy. This means the adjustment changes the tax structure but does not add a direct extra burden to the current retail prices of petrol and diesel.

Part of Climate and Fiscal Reforms

The Climate Support Levy is intended to support climate-related financing and environmental initiatives. The measure is also linked to Pakistan’s wider fiscal-reform commitments under the IMF programme.

The revised framework shifts part of the fuel levy collection from the Petroleum Levy to the Climate Support Levy.

What It Means for Consumers

Consumers will not see an immediate price increase solely because of this levy adjustment. However, retail fuel prices can still change in future reviews depending on international oil prices, exchange-rate movements, import costs, and future government notifications.

Disclaimer

This article is for informational purposes only and is based on publicly available reports. The accompanying image is AI generated for illustrative purposes only. Fuel prices, levies, official notifications, and government policies may change over time. Readers are encouraged to verify the latest information through official government sources.