Latest news with #CarbonLevy
Business Recorder
01-07-2025
- Business
- Business Recorder
IPPs warn govt: Furnace oil levies could raise generation costs
ISLAMABAD: Independent Power Producers (IPPs) have warned the government that proposed levies on furnace oil could significantly raise electricity generation costs and disrupt refinery operations. In letters sent to the Petroleum Division and other stakeholders ahead of the 2025–26 federal budget, both Hub Power Company (Hubco) and the IPPs Advisory Council (IPPAC) expressed serious concerns over the planned imposition of a Carbon Levy (CL) and Petroleum Levy (PL) on furnace oil. According to the draft Finance Bill 2025–26, a PL of Rs. 77 per litre (Rs. 82,077 per metric ton) and a CL of Rs. 2.5 per litre (Rs. 2,665 per metric ton) will be enforced starting July 1, 2025. Baggasse-fired IPPs: Nepra set to approve 60% hike in FCC Hubco's Chief Financial Officer noted that this would raise furnace oil prices by Rs. 84,742 per metric ton—making it less competitive compared to other fuels used in power generation. The CFO emphasized that while cheaper sources of electricity are available, FO-based plants are still needed during summer peaks due to their quick start-up capability. He warned that the added levies would lead to higher electricity tariffs, undermining the government's recent efforts to cut costs by renegotiating Power Purchase Agreements (PPAs) with several IPPs. 'Furnace oil makes up 20–25% of local refinery output,' he said. 'If consumption drops due to higher prices, it could cause storage issues at refineries and worsen the already critical circular debt situation. Moreover, the expected revenue from these levies and related sales tax collections may not materialize.' Hubco urged the Ministry of Energy to reconsider the move, cautioning that it could intensify the energy crisis and negatively affect the economy. IPPAC echoed these concerns, saying the decision contradicts the government's stated support for domestic industry. It warned that higher FO costs would drive up industrial production expenses and reduce utilization of FO-based power plants. The council noted that recently renegotiated tariffs aimed at lowering electricity costs would be rendered ineffective by the new levies. 'These price hikes will likely push FO-based IPPs down the merit order, potentially making them inactive,' IPPAC stated. It also predicted that the levies would worsen the circular debt issue and reduce government revenues due to falling furnace oil sales and lower sales tax collection. Copyright Business Recorder, 2025
Business Recorder
01-07-2025
- Business
- Business Recorder
IPPs warn govt: FO levies could raise generation costs
ISLAMABAD: Independent Power Producers (IPPs) have warned the government that proposed levies on furnace oil could significantly raise electricity generation costs and disrupt refinery operations. In letters sent to the Petroleum Division and other stakeholders ahead of the 2025–26 federal budget, both Hub Power Company (Hubco) and the IPPs Advisory Council (IPPAC) expressed serious concerns over the planned imposition of a Carbon Levy (CL) and Petroleum Levy (PL) on furnace oil. According to the draft Finance Bill 2025–26, a PL of Rs. 77 per litre (Rs. 82,077 per metric ton) and a CL of Rs. 2.5 per litre (Rs. 2,665 per metric ton) will be enforced starting July 1, 2025. Baggasse-fired IPPs: Nepra set to approve 60% hike in FCC Hubco's Chief Financial Officer noted that this would raise furnace oil prices by Rs. 84,742 per metric ton—making it less competitive compared to other fuels used in power generation. The CFO emphasized that while cheaper sources of electricity are available, FO-based plants are still needed during summer peaks due to their quick start-up capability. He warned that the added levies would lead to higher electricity tariffs, undermining the government's recent efforts to cut costs by renegotiating Power Purchase Agreements (PPAs) with several IPPs. 'Furnace oil makes up 20–25% of local refinery output,' he said. 'If consumption drops due to higher prices, it could cause storage issues at refineries and worsen the already critical circular debt situation. Moreover, the expected revenue from these levies and related sales tax collections may not materialize.' Hubco urged the Ministry of Energy to reconsider the move, cautioning that it could intensify the energy crisis and negatively affect the economy. IPPAC echoed these concerns, saying the decision contradicts the government's stated support for domestic industry. It warned that higher FO costs would drive up industrial production expenses and reduce utilization of FO-based power plants. The council noted that recently renegotiated tariffs aimed at lowering electricity costs would be rendered ineffective by the new levies. 'These price hikes will likely push FO-based IPPs down the merit order, potentially making them inactive,' IPPAC stated. It also predicted that the levies would worsen the circular debt issue and reduce government revenues due to falling furnace oil sales and lower sales tax collection. Copyright Business Recorder, 2025
Business Recorder
13-06-2025
- Business
- Business Recorder
Energy ministry seeks cabinet nod for fuel levies in line with IMF commitments
The Ministry of Energy (Petroleum Division) has proposed amendments to the Petroleum Products (Petroleum Levy) Ordinance, 1961, to introduce new levies on fuel, specifically Carbon Levy and Petroleum Levy (PL) on furnace oil, petrol, and diesel. As per the summary prepared by the ministry for the consideration of the cabinet, under the ongoing International Monetary Fund (IMF) programme for Resilience and Sustainability Financing (RSF), the government has agreed for imposition of Carbon Levy on petrol, diesel and furnace oil along with imposition of Petroleum Levy (PL) on furnace oil. 'This will include supplementary carbon levy levied through the PDL on gasoline and diesel of Rs5 per liter, which will be phased in over two years. As part of this reform, fuel oil will be added to the PDL (PL), with the base and supplementary rate applicable to it. 'The scope, phasing and level of the supplementary carbon levy will be legislated through the FY26 Finance Act. Future Finance Acts will be able to raise the carbon levy beyond this initial rate as required.' Budget 2025-26: Pakistan targets 4.2% growth as Aurangzeb presents proposals 'for a competitive economy' The Ministry of Energy informed that the proposed amendments in the Petroleum Products (Petroleum Levy) Ordinance, 1961, have been incorporated in the draft Finance Bill 2025-26. 'The draft amendments, inter-alia, provide that there shall be levied Carbon Levy at the rate of Rs.2.5/litre on Motor Spirit and High Speed Diesel for FY 2025-26, which shall be enhanced to Rs5/litre for FY 2026-27. 'The Carbon Levy on Furnace Oil shall be levied at the rate of Rs2.5/litre (Rs2,665/MT) for FY 2025-26, which shall be enhanced to Rs5/litre for FY 2026-27 in addition to the Petroleum Levy at the rate notified by the Federal Government.' As per the summary, during the government's negotiations with the IMF, it has been agreed that the Petroleum Levy at the rate of Rs77/liter (Rs82,077/MT) will be imposed on Furnace Oil w.e.f 1st July 2025, upon enactment of the amendments in the PL Ordinance 1961 through Finance Act 2025-26. It shared that under the amended PL Ordinance, 1961, the federal government has been authorised to determine and notify the rates of Petroleum Levy. 'Accordingly, proposals for imposition of Carbon Levy and Petroleum Levy at the rate as specified are submitted for consideration and approval of the Cabinet,' read the summary. It shared that the principles and rates for imposition of both Carbon Levy and PDL have been finalised with the IMF, both by the Finance Division and the Petroleum Division jointly.
The South African
12-06-2025
- Automotive
- The South African
3 pieces of GOOD news for the South African taxi industry
There have been three major developments in the South African taxi industry in recent weeks. Firstly, government announced it will scrap nearly 2 000 illegal/unroadworthy minibus taxis. Likewise, there is a directive to convert approximately 400 vehicles to alternative fuels, too. This progress in the South African taxi industry is all part of a 'Taxi Recapitalisation Plan' that was presented in parliament last month (Tuesday 20 May 2025). As such, government's broader mandate is to finally modernise the industry through various projects. In time, these vital industry reforms will translate into savings for the end user. Image: File Like them or loathe them, the South African taxi industry is the lifeblood of the country's economy. More than two thirds (66%) of the nation relies on public transport to get to and from work each day. As such, another piece of good news is that the South African National Taxi Council (SANTACO) won't raise fares this month. When the Minister of Finance Enoch Godongwana hiked the General Fuel Levy (GFL) for the first time in three years, it was widely anticipated that taxi fares would increase in June 2025. This would add yet more financial pressure to the country's poor. Effective from this month, the GFL increased by 16c per litre and 15c per litre for petrol and diesel respectively. As a result, the total cost of GFL is R4.01 per litre for petrol and R3.85 per litre for diesel. That taxi fares are unmoved is a remarkable turn of events when you remember that the Carbon Levy increased by 3c per litre back in April, too. We're not there yet, but cleaner, greener and safer, is what the future of the South African taxi industry is all about. Image: File Furthermore, new Liquid Petroleum Gas (LPG) conversions will lower the cost of fuel for taxis by as much 35%, reports BusinessTech . The department says LPG is the most viable alternative fuel because of the ease of conversion for minibus taxis. Better still, LPG runs cleaner, providing a longer engine lifespan and less maintenance. The option of dual systems is also viable for long-range commutes. At last count, the department says only seven taxis have converted as part of the LPG pilot project. It hopes to install 400 conversion kits. Finally, stakeholders in the South African taxi industry are once again encouraged to take advantage of the Taxi Recapitalisation Projects (TRP). Government says voluntarily surrendered unroadworthy minibus taxis will be scrapped free of charge. And owners/operators will gain access to an allowance which they can recapitalise on a new taxi. The department believes there are as many as 2 350 illegal/unroadworthy taxis still operating in South Africa. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1. Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
Business Recorder
10-06-2025
- Business
- Business Recorder
Budget FY2025-26: Pakistan govt proposes ‘Carbon Levy' on petrol, diesel
Pakistan government imposed a new tax on the sale of petrol, diesel and furnace oil namely 'Carbon Levy' at Rs2.5 per litre to be collected in upcoming fiscal year 2025-26 that will be raised to Rs5 per litre in the financial year 2026-27, according to budget documents on Tuesday. The new tax will be collected apparently with effect from July 1, 2025 in addition to the existing expensive petroleum development levy (PDL) at Rs78 per litre on petrol and Rs77 per litre on diesel, making the petroleum products further costlier. Budget 2025-26: Pakistan targets 4.2% growth as Aurangzeb presents proposals 'for a competitive economy' While announcing the budget for 23025-26, Finance Minister Muhammad Aurangzeb also announced to collect Petroleum Levy on the sale of furnace oil (FO) at the rate to be notified by Federal Government from time to time. While speaking at the National Assembly's floor, Aurangzeb said that the Carbon Levy was being imposed to discourage more use of fossil fuel and to mobilise resources for climate change and green energy programmes. Topline Securities commented 'in line with commitment to IMF, the government has imposed PDL on furnace oil; however, the rate is not disclosed yet'. Recent reports suggest the government would also surge PDL on the petroleum products to Rs100 per litre in the upcoming fiscal year (FY26) in line with s new agreements with International Monetary Fund (IMF) under the ongoing 37-month long $7 billion Extended Fund Facility (EFF). Key highlights of Pakistan budget for 2025-26 To recall, the diesel is being sold at Rs254.64 per litre and petrol at Rs253.63 per litre in Pakistan with effect from June 1. 2025. The government revises the petroleum products prices twice a month in line with global oil pricing trends.
