In a significant move, a recent presidential ordinance has removed the cap on petroleum levy (PL) rates by abolishing the Fifth Schedule, granting the government unrestricted authority to set fuel tax rates as it sees fit. Previously, under the Fifth Schedule, the government was limited to a maximum levy of Rs. 70 per litre for petroleum products. With the ordinance’s enactment, there is now no legal ceiling, leaving the government free to impose any levy rate it deems necessary.
As a result of this change, the government has already raised the petroleum levy on petrol by Rs. 8.02 per litre, bringing the total levy to Rs. 78.02 per litre. Similarly, the levy on diesel has been increased by Rs. 7.01 per litre, setting the new total diesel levy at Rs. 77.01 per litre.
The move comes despite a drop in global oil prices, which many expected would lead to lower fuel costs for consumers. However, instead of passing on the relief to the public, the government has opted to hike the petroleum levy to maintain revenue levels. This decision has drawn criticism, particularly in light of Prime Minister Shehbaz Sharif’s earlier statements, where he suggested that the benefits of lower global oil prices would be directed toward the development of Balochistan, rather than reducing local fuel prices.
Despite these increases, the Ministry of Finance has announced that fuel prices will remain unchanged for the next 15 days. According to the official notification, petrol will continue to be priced at Rs. 254.63 per litre, and diesel at Rs. 258.64 per litre. This essentially nullifies the potential impact of global oil price reductions on local fuel prices, as the increase in petroleum levy has offset any savings.
The ordinance has raised concerns about transparency and the potential burden on consumers, as it grants the government unchecked power to impose petroleum levies without the usual parliamentary oversight. Critics argue that this move could lead to unpredictable increases in fuel taxes, further straining consumers already facing rising costs.
