ISLAMABAD: Prime Minister Shehbaz Sharif this week approved the decision to increase the levy on high-octane fuel used in luxury cars by Rs200 [$0.71] per liter, his office said in a statement, with the move expected to shift the burden of rising fuel costs on the wealthy segment.
The US-Israel war on Iran in the Middle East has disrupted global shipping lines, driving oil prices significantly higher. The move has impacted economies worldwide, prompting Pakistan to take austerity measures to conserve fuel and mitigate the impacts of inflation.
Sharif approved the decision to hike the levy on high-octane fuel from the existing Rs100 [$0.36] per liter by Rs200 per liter during a meeting he chaired via video-link on Sunday, his office said. The levy on high-octane fuel has been increased to Rs300 [$1.07] per liter after the fresh hike.
“This decision will save the government Rs9 billion [$32 million] per month, and according to the prime minister’s directive, this amount will be used to provide relief to the public,” the Prime Minister’s Office (PMO) said in a statement.
“The move will reduce the burden on the economy, with the wealthiest segment of society bearing the cost.”
High-octane fuel is used mostly by luxury car owners rather than the general public. Through the targeted increase, the government hopes to collect a larger sum of money from a small, wealthy segment and not the majority of the masses.
“This decision will not lead to any increase in public transport fares or airfares,” the PMO added.
In a separate statement issued by Sharif’s office on Monday, the prime minister announced he was banning the use of high-octane fuel for government vehicles.
Sharif issued directives for all federal departments, authorities and institutions to ensure immediate and complete implementation of this decision. The prime minister added that this measure will reduce government expenditures and enable better use of public resources.
“The prime minister instructed the relevant authorities to establish an effective monitoring system for this decision and to take strict action in case of violations,” the PMO said.
In early March, Pakistan increased petroleum prices by nearly Rs55 ($0.20) per liter. The move pushed petrol price above Rs320 ($1.14) per liter and diesel close to Rs336 ($1.20), adding to inflationary pressures.
The government later announced a series of austerity steps, including a four‑day work week for government offices, requiring 50 percent of staff to work from home and closing all schools for two weeks.
Pakistan’s inflation has eased to around 6–7 percent in recent months after peaking at 38 percent in 2023. However, fuel costs continue to drive broader price increases across the economy.
Finance Minister Muhammad Aurangzeb said on Sunday that the country is expected to be in ” a good place” as far as fuel supply is concerned in April.
“We meet on a daily basis so that we look at procurement, we look at the sources of procurement, we look at logistical issues, we look at maritime affairs, we look at diplomatic efforts,” Aurangzeb said in televised comments on Sunday.
“And on the basis of this, we say that by April, we are in a good place in terms of the supply situation.”
