Petrol to Become More Expensive as Govt Likely to Slap Carbon Levy

The government is set to impose a carbon levy of Rs. 2.5 per liter on petroleum products in the federal budget, a move expected to generate around Rs. 48 billion in the fiscal year 2025-26. The levy, which will apply to motor spirit and high-speed diesel, is projected to double to Rs. 5 per liter in fiscal year 2026-27, potentially raising Rs. 96 billion. Furnace oil will also face a carbon levy of Rs. 2 per liter (Rs. 2,665 per metric ton) in FY26, increasing to Rs. 5 per liter in FY27. This will be in addition to the existing petroleum levy set by the federal government. Sources said the measure will be implemented by amending the Petroleum Products (Petroleum Levy) Ordinance of 1961.