Government Increases Petroleum Levy on High-Octane Fuel
The government has decided to increase the petroleum levy on high-octane fuel, a product mainly used by owners of luxury and high-performance vehicles. This move aims to extract around Rs9bn per month from those who can afford it and redirect this amount to protect the public from rising oil prices.
While the decision is a stopgap response rather than a long-term strategy, it introduces targeted relief in an environment of global oil price shock. However, the merits of the move should not be overstated as it does little to address structural conditions that make Pakistan vulnerable to external energy shocks like deep reliance on imported fuels and narrow fiscal space.
Finance Minister Muhammad Aurangzeb acknowledged that hope is not a strategy as the world waits for the US-Israel war on Iran to end. The earlier steps announced, such as reduced fuel allowances and partial work-from-home arrangements, are also limited. Even if hostilities subside soon, supply chain disruptions and production shutdowns could sustain high energy prices.
The need now is to move towards permanent structural demand management by closing markets, restaurants, and businesses early. These measures should be treated as baseline policy rather than emergency improvisation. The government’s response so far does not demonstrate the resolve required to address the underlying imbalances that have led to domestic instability during this crisis.