Rs77 per litre PL on furnace oil likely
According to the Petroleum Division, this move is part of Pakistan's ongoing commitments under the IMF's Resilience and Sustainability Facility (RSF) programme. The government has agreed to introduce a Carbon Levy on petrol, diesel, and furnace oil, along with a Petroleum Levy specifically on furnace oil, as part of broader fiscal and environmental reforms.
A relevant extract from the agreement states: 'RM 3 (end-June 2025) Carbon Levy: This will include a supplementary carbon levy imposed through the PDL (Petroleum Development Levy) on gasoline and diesel at PRs 5 per litre, phased in over two years. As part of this reform, fuel oil will be added to the PDL, with both base and supplementary rates applicable.
Petrol, HSD and furnace oil: Rs2.5/litre carbon levy imposed
The scope, phasing, and level of the supplementary carbon levy will be legislated through the FY26 Finance Act. Future Finance Acts may increase the carbon levy beyond this initial rate as needed.'
As per the proposed amendments (Annex-I) included in the draft Finance Bill 2025-26: A Carbon Levy of Rs 2.5 per litre will be imposed on motor spirit (petrol) and high-speed diesel for FY 2025-26, which will be increased to Rs 5 per litre in FY 2026-27.
On furnace oil, a Carbon Levy of Rs 2.5 per litre (Rs 2,665/MT) will apply in FY 2025-26, rising to Rs 5 per litre in FY 2026-27, in addition to the Petroleum Levy of Rs 77 per litre (as agreed with the IMF).
The Petroleum Division has confirmed that these rates were agreed during discussions with the IMF and will take effect once the Finance Act is enacted.
Under the amended Petroleum Levy Ordinance, 1961, the federal government is authorized to determine and notify applicable PL rates.
The proposals for both the Carbon Levy and the Petroleum Levy—as outlined in paragraphs 2 and 3 of the summary—are being submitted to the Federal Cabinet for formal consideration and approval.
It was also noted that the Finance Division and Petroleum Division jointly finalized the principles and rates of the levies with the IMF, and thus, the summary has not been circulated for formal comments from the Finance Division.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
an hour ago
- Business Recorder
‘Cruel initiative': Farmers call for end to 45% agricultural income tax
Small and progressive farmers have called for abolishing the 45% agricultural income tax, describing it as a cruel initiative that will annihilate the entire agriculture sector given they have been dealing with 20%-50% underpricing of agricultural produce since the last couple of years. These farmers have said they will challenge the tax in the courts while declaring it as 'illegal' and 'unconstitutional'. Moreover, the farmers say they already been paying 5% to 15% agricultural income tax and advance agricultural income tax worth Rs200 per acre since 1994. IMF agreed to spare agriculture sector from taxes, says PM Shehbaz Sindh Chamber of Agriculture (SCA) Senior Vice President Nabi Bux Sathio told Business Recorder: 'Let me dispel common misconception of industrialists and trade bodies that agriculturalists do not pay taxes.' 'We are paying taxes since 1994 while we are not given loans by banks and no privileges like special industrial zones or special export zones etc by the government. Has the government any justification to increase agricultural income tax from 15% to 45%, while agricultural produce in the range of Rs600,000 is exempted from the tax?' He said industrialists, wholesalers and retailers can fix prices of their products but agriculturalists are at the mercy of the market. SCA rejects '45pc agricultural income tax' 'We are getting low prices for our agricultural produce since Jan 2024 - around 19 months. We are getting 20%to 50% less money for wheat, paddy (rice), cotton, oil seed crops and others. However, we have got a better price of sugarcane.' 'There are three main inputs for crops such as seeds, fertilizers and diesel. I get a 50 kg bag of DAP [phosphatic fertilizer] at Rs9,000, urea at Rs2,600, 1kg of hybrid rice seed at around Rs1,500, per litre diesel at Rs186 in 2023, while they are right now being sold at Rs13,000, Rs4,400,Rs2,000 and Rs286 respectively at a local market,' he added. Farmers Organisation Council Sindh Chairman Jawaid Junejo said there is a plan to destroy the agriculture sector which may bring about food insecurity in the country. He said the government must review its decision and give relief to farmers so that they may grow crops which can benefit the country and countrymen.
Business Recorder
8 hours ago
- Business Recorder
Rs12bn grant for SSWMB approved
KARACHI: The Cabinet Committee on Finance, under the chairmanship of Energy, Development & Planning Minister Syed Nasir Hussain Shah and Interior & Law Minister Zia-ul-Hassan Lanjar, held a high-level meeting in the committee room of the Energy Department. During the meeting, the Sindh Solid Waste Management Board (SSWMB) presented a request for an additional budget for the fiscal year 2024–2025. After thoroughly reviewing the legal aspects of the request, the committee members, in mutual consultation with the provincial ministers, approved a conditional out-of-budget grant of Rs 12 billion for the Sindh Solid Waste Management Board. The Energy and Interior Ministers directed the relevant officials of the Solid Waste Board to address all concerns and legal objections raised by the Finance Secretary regarding the grant. The committee also decided that the Solid Waste Management Board will reassess all existing contracts with waste collection contractors, as the rates in Sindh were found to be higher than those in other cities. A proper system will be introduced to accurately measure the weight of garbage removed from the city, and Razor Readers will be installed in all garbage collection vehicles. This will ensure that contractors are paid according to the actual weight of garbage transported, thereby preventing the misuse of public funds. On this occasion, Minister Nasir Shah emphasized the need to further improve the operations of the Solid Waste Management Board to enhance cleanliness and provide relief to the public. He urged officers to utilize their full potential for this purpose. The committee was informed that the Solid Waste Management Board is currently operating in Karachi, Hyderabad, Sukkur, and Larkana, serving a population of approximately 24 million. With increased operations, the board's expenditures have risen to Rs 43 billion. It was further revealed that the board is expecting a revenue of Rs 10 billion from various ongoing projects, which are currently being finalized. Minister Nasir Shah also stressed the importance of ensuring timely payments to waste collection contractors and establishing a transparent mechanism to ensure continuity in cleanliness and waste removal services. It was decided that the Solid Waste Board will renew all contracts within 3 to 6 months. The meeting was also attended by Planning & Development Chairman Najam Shah, Finance Secretary Fayaz Jatoi, Local Government Secretary, and other officials. Copyright Business Recorder, 2025
Business Recorder
8 hours ago
- Business Recorder
PMI streamlines local operations: PMPKL takes steps to delist from PSX
KARACHI: Philip Morris (Pakistan) Limited (PMPKL), the local arm of global tobacco giant Philip Morris International (PMI), has formally taken steps to delist from the Pakistan Stock Exchange (PSX), signaling a major shift in its corporate strategy. The move, aimed at consolidating operations and enhancing group-level efficiency, has reached a critical stage with the company's buyback offer now disclosed in line with voluntary delisting requirements. In a notice issued to the Pakistan Stock Exchange, PMPKL reiterated that the delisting proposal was first approved by its Board of Directors at a meeting held on March 25, 2025, in Karachi. Under Rule 5.14 of the PSX Voluntary Delisting Rules, the board resolved to initiate the delisting process. As part of this transition, Philip Morris Investments B.V., the company's majority shareholder and sponsor, has committed to buying back 1,444,931 shares from minority shareholders at the price of Rs 1300 per share. Philip Morris Brands SARL, the co-sponsor, will retain its shareholding in the now private entity. This move marks a significant milestone in the journey of PMPKL, which originally entered the Pakistani market by acquiring Lakson Tobacco Company Limited, subsequently rebranding to its current identity on February 25, 2011. The company is engaged in the manufacture and sale of cigarettes and tobacco products, and has operated under the banner of one of the world's leading tobacco firms. Analysts noted that the intended delisting reflects a broader trend among multinational entities reassessing the viability and regulatory landscape of public listing in emerging markets. The move, once completed, will make Philip Morris Pakistan a privately held company again — allowing its sponsors more direct operational control in a challenging regulatory and fiscal environment. Market observers view the step as part of a global realignment by PMI to optimize capital structures and reduce reporting burdens across its emerging market entities. Copyright Business Recorder, 2025
