Pakistan’s government has blocked a potential fuel price reduction by raising the petroleum levy.

Despite global petrol and diesel price drops of approximately $6 and $5 per barrel respectively, the government increased the levy from Rs70 to Rs80 per litre. The change in levy was made late at night on Tuesday.

This prevents a decrease in domestic fuel prices, which officials claim would boost demand, increase carbon emissions, and strain foreign exchange reserves. 

The added revenue will reportedly fund road construction projects in Sindh and Balochistan, seemingly aimed at securing political support.  This decision comes as the government also committed to a Rs5 per litre carbon levy to the IMF as part of a $1.3 billion agreement, effective July 1st. 

The ex-depot prices for petrol and high-speed diesel remain unchanged at Rs254.63 and Rs258.64 per litre, respectively, with total taxes on both fuels now reaching approximately Rs96-97 per litre.

 This move directly impacts the budgets of Pakistan’s middle and lower-middle classes who heavily rely on petrol for transportation.

Meanwhile, Prime Minister Shehbaz Sharif told the cabinet that the price of fuel is being kept unchanged to fund development projects in Balochistan.