Petrol, diesel prices may face strong impact as climate levy set to double

The federal government is considering an increase in the Climate Support Levy on petrol and high-speed diesel in the 2026-27 federal budget, a move that could raise the charge by Rs2.5 per litre on both fuels.

According to the 24NewsHD TV channel, the proposed increase would double the existing levy from Rs2.5 per litre to Rs5 per litre. 

If approved, the revised rate would apply to both petrol and high-speed diesel as part of the government's broader fiscal and environmental policy framework.

The Climate Support Levy was introduced during the current fiscal year in line with commitments made under agreements with the International Monetary Fund (IMF). 

At present, consumers pay a levy of Rs2.5 per litre on petrol, while the same rate is applied to high-speed diesel.

The levy is designed to discourage excessive reliance on fossil fuels and generate revenue for environmental and climate-related initiatives. 

Government officials believe the measure can help finance projects aimed at strengthening climate resilience and promoting sustainable development.

Under the proposed framework, revenue generated through the levy would support green infrastructure, renewable energy projects and climate adaptation programmes across the country. 

The initiative forms part of Pakistan’s wider strategy to address environmental challenges and reduce the long-term impact of climate change.

The Climate Support Levy is also linked to reforms agreed with the IMF under the Resilience and Sustainability Facility (RSF), which encourages climate-focused economic policies and investments.

Officials expect the levy to generate billions of rupees in dedicated funding if the proposed increase is approved as part of the upcoming federal budget.

The proposal remains under consideration and is expected to be reviewed during discussions on the federal budget for the 2026-27 fiscal year.

Reporter: Waqas Azeem