The Government of Pakistan has imposed a climate support levy on petroleum products at the demand of the International Monetary Fund. As per the details, with the commencement of the new fiscal year 2025-2026, the Federal Government has enforced new taxes on petroleum products in line with the demand of the IMF climate financing conditions.
A fresh climate support levy of Rs 2.50 per litre has been imposed on petroleum, diesel, and kerosene.
This levy has been adjusted by reducing the previously applicable Petroleum Development Levy, PDL. Under the new arrangement, the PDL on petrol has been revised down to Rs 75.72 per litre to accommodate the carbon needs. Previously, petrol carried a PDL of Rs 78 per litre.
For high-speed diesel, the PDL has been revised to Rs. 74.5 per litre from the earlier Rs. 78 per litre to allow for the adjustments of the climate levy. Whereas on kerosene, the new climate support levy costs around Rs 2.50 in addition to the existing Rs 18.95 per litre PDL. Similarly, light diesel continues to carry a PDL of Rs 15.37 per litre.
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The decision of the Government of Pakistan to implement the climate support levy comes as part of its commitment to the IMF conditions under the Global Climate Financing Framework. These new charges have been imposed in the fourth nightly increase of the petroleum prices, pushing the petrol price up by Rs 8.36 per litre.
According to a notification issued by Pakistan’s Ministry of Finance, the petrol price has been increased by Rs 14.80 per litre, bringing the new petrol price to Rs 266.89 per litre. Similarly, the price of high-speed diesel has been raised by Rs 10.39 per litre, and the new rate has been set at Rs 272.98 per litre.
It is noteworthy to remember that Pakistan is among the most vulnerable countries to be affected by climate change. However, its share of carbon emissions is much lower than other countries.