Govt removes cap on petrol levy

Federal government has issued a presidential ordinance abolishing the Fifth Schedule effectively removed the cap on petroleum levy (PL) rates and granted the government unrestricted authority to set levy amounts at its discretion.

Previously, under the Fifth Schedule, the government was bound to a maximum limit of Rs70 per litre for petroleum levy. With the schedule now abolished, there is no legal ceiling, allowing the government to impose any rate of levy it deems appropriate. 

Through the ordinance, the government has already increased the petroleum levy on petrol by Rs. 8.02 per litre, bringing the total levy on petrol to Rs. 78.02 per litre. Likewise, the levy on diesel has been raised by Rs. 7.01 per litre, making the total diesel levy Rs. 77.01 per litre.

The move comes at a time when global oil prices have dropped, but instead of passing on the relief to consumers, the government has opted to increase the petroleum levy to maintain revenue. The increase has sparked criticism, especially after Prime Minister Shehbaz Sharif previously stated that benefits of lower global oil prices would be used for Balochistan’s development instead of reducing local fuel prices. 

Despite the changes in levy, the Ministry of Finance, in its most recent announcement, decided to keep the fuel prices unchanged for the next 15 days. According to the official notification, petrol remains at Rs. 254.63 per litre, and diesel at Rs. 258.64 per litre. The impact of global oil price reductions has effectively been neutralized through the increase in petroleum levy. 

The ordinance has raised concerns over transparency and burden on consumers, as the government now holds unchecked authority to impose petroleum levies without parliamentary oversight.