Budget 2026-27: Petrol Price in Pakistan to jump high as govt plans Rs5 Carbon Levy Hike

ISLAMABAD – Petrol prices in Pakistan are once again heading toward uncertainty as new budget proposals begin to take shape. Behind closed doors, officials working on FY2026–27 measures are weighing a sharp increase in the carbon levy on petroleum products, a move that could quietly but directly raise the cost of fuel across the country.

With Carbon Levy hovering at Rs2.50 per litre, the government plans to double it to Rs5 per litre from July 1, 2026 under new proposal. Though framed as part of broader revenue needs and climate commitments, the change is expected to ripple quickly through transport costs and household budgets, leaving consumers to absorb the impact at the pump once the new fiscal year begins.

Consumers may face higher fuel costs in the next fiscal year as the government is considering an increase in the carbon levy on petroleum products, according to sources involved in the budget-making process.

At present, petroleum products are subject to a carbon levy of Rs2.50 per litre under the ongoing fiscal year’s budget. Officials said the upcoming proposal would double the existing rate as part of broader revenue and climate policy measures.

The revised levy, if approved, will take effect from the beginning of the new financial year and is expected to contribute additional revenue while aligning with environmental commitments. The proposal is likely to be formally announced in the federal budget for FY2026–27.

Lately, Pakistan announced sharp Rs 22 per litre cut in petrol and diesel prices, bringing petrol to Rs 381.78 and diesel to Rs 380.78 per litre. The government said the reduction was made to provide public relief and fulfill the prime minister’s promise to pass on benefits when fiscal space allows.

This follows smaller reduction, and officials highlighted continued subsidies for transport users, including motorcycles, rickshaws, and public transport, with claims of over Rs 130 per litre in absorbed costs during global price pressures.