Pakistan to introduce PKR 2.5/liter carbon levy on fuel
Collection from the levy is expected at PKR 48 billion in FY26, to double next year
Pakistan's government is set to impose a carbon levy of PKR 2.5 per liter on petroleum products in the federal budget Tuesday, a move expected to generate around PKR 48 billion in the 2025-26 fiscal year, sources told Nukta.
The levy, which will apply to motor spirit and high-speed diesel, is projected to double to PKR 5 per liter in the following fiscal year, potentially raising PKR 96 billion in 2026-27.
Furnace oil will also face a carbon levy of PKR 2 per liter (PKR 2,665 per metric ton) in FY26, increasing to PKR 5 per liter in FY27. This will be in addition to the existing petroleum levy set by the federal government.
Officials said the measure will be implemented by amending the Petroleum Products (Petroleum Levy) Ordinance of 1961. The move aims to boost revenue while addressing environmental concerns linked to fossil fuel consumption.
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