ISLAMABAD – Petrol and diesel prices are expected to climb higher after Budget 2025, as government announced a new carbon levy of Rs2.5 per litre on fuel products.
The fuel prices are said to jump in second half of June 2025 after federal budget is finalized. The current prices of petrol and diesel hovers at Rs253.63 and Rs. 254.64 per litre, but with the carbon tax added, prices could rise to approximately Rs. 256.13 for petrol and Rs. 257.14 for diesel.
Petrol Carbon Levy
| Products | Current Price | Carbon Levy | Expected Price |
|---|---|---|---|
| Petrol | 253.63 | 2.5 | 256.13 |
| Diesel | 254.64 | 2.5 | 257.14 |
Sharif led government plans to implement this carbon levy starting in fiscal year 2025-26 as part of its commitment to green budgeting and environmental sustainability. Carbon levy will be applied alongside the existing petroleum levy and is anticipated to generate Rs. 45 billion in additional revenue.
The surge may put additional pressure on consumers, especially as fuel prices already hover at high levels. The levy is expected to rise to Rs. 5 per litre in FY2026-27, which could result in further price hikes.
Budget 2025
The country is likely to continue its fiscal surplus in FY26 but will maintain high direct taxes without relief for salaried workers or businesses. Budget will follow IMF guidelines, facing challenges like declining revenues from oil and gas and pressure on customs duties.
New excise taxes may be introduced, but enforcement issues risk expanding the informal economy. The Federal Board of Revenue struggles with a large tax shortfall, while non-tax revenues from the State Bank and petroleum levies remain strong.
