ISLAMABAD (Kashmir English): Consumers might pay more for fuel because the federal government wants to double the carbon levy on gas and other oil products for the FY2026-27 budget.
The budget talks say the carbon levy will go from Rs. 2.50 to Rs. 5 per litre. The government is likely to start this new pricing at the beginning of the next fiscal year, and it’ll be used for climate policies along with raising money.
Officials familiar with the proposal said the current fiscal year’s budget had already provided for a carbon levy of up to Rs. 5 per litre. The government is now preparing to implement the full levy amount in FY2026-27.
If approved, the higher levy could contribute to an increase in fuel prices for consumers, depending on international oil prices, exchange rate movements, and other taxation measures announced in the budget.
The government is expected to formally unveil the proposal during the presentation of the Federal Budget 2026-27.
Govt massively reduces diesel, petrol prices by Rs22 per litre
The federal government has announced the reduction in diesel and petrol prices by Rs22 per litre each, the Prime Minister’s Office (PMO) said on Friday.
The statement described the reduction as a gift to the nation on the third day of Eid-ul-Azha, quoting Prime Minister Shehbaz Shehbaz as saying, “Providing relief to the public remained among his top priorities.”
It noted that relief had also been extended last week when petrol and diesel prices were reduced.
Following the reduction, the price of petrol was fixed at Rs381.78 per litre, down from the previous rate of Rs403.78. Similarly, the price of HSD was reduced to Rs380.78 per litre from Rs402.78.
“Even in the most stringent circumstances, the federal government continued the series of relief for the public and provided subsidies on fuel for public/goods transport and for those using motorcycles and rickshaws,” it said.
During the worst global oil crisis, the prime minister provided a subsidy of over Rs130 per litre, preventing an increase in domestic fuel prices and extending relief to consumers, the PMO statement added.
