ISLAMABAD: The federal government has increased the Climate Support Levy on petrol and diesel while simultaneously trimming the Petroleum Levy on both products, according to a notification issued by the Petroleum Division. The changes, which took effect from July 2, are expected to leave pump prices for consumers unaffected.
Under the new arrangement, the Climate Support Levy on both petrol and diesel has been raised from Rs2.5 to Rs5 per litre, with an increase of Rs2.5 per litre. To offset this, the Petroleum Levy on the two products has been reduced by an equivalent Rs2.5 per litre.
High Octane Blending Component, more commonly known as HOBC and widely used in higher-performance vehicles, has also been brought into the fold. The Climate Support Levy on HOBC has likewise gone up by Rs2.5 per litre, while its Petroleum Levy has been cut by the same margin.
As a result of the simultaneous increase in the Climate Support Levy and reduction in the Petroleum Levy, the current retail prices of petrol and diesel remain unchanged despite the revision in the tax structure.
The notifications were issued by the Petroleum Division as part of the government's revised fuel levy framework, which took effect from July 1.
The latest changes come after the federal government last week kept the prices of petrol and diesel unchanged at Rs299.50 and Rs311.47 per litre, respectively, following its fuel price review.
On June 19, the government announced a substantial relief package, cutting petrol prices by Rs74 per litre and diesel by Rs67 per litre, following a sharp decline in international crude oil prices and easing tensions in the Middle East.
The reduction, announced by Prime Minister Shehbaz Sharif, was aimed at passing on the benefit of falling global oil prices to consumers.
That relief had followed the US-Iran peace agreement, brokered in part through Pakistan's diplomatic efforts, and the subsequent reopening of the Strait of Hormuz, a critical global energy transit route whose reopening helped calm supply concerns and pushed crude prices lower.
Kerosene oil also saw a steep cut at the time, falling by Rs48.29 per litre to Rs233.90.
Since then, however, the government has been recalibrating the levy structure even as retail prices have largely held steady, with the petroleum levy on diesel rising from Rs72.97 to Rs79.54 per litre and that on petrol edging up marginally from Rs66.25 to Rs66.64 per litre, while the levy on kerosene has remained unchanged at Rs20.36 per litre.
