Pakistan Increases Levy on High-Octane Fuel for Luxury Vehicles
Islamabad – Pakistan’s Prime Minister Shehbaz Sharif has directed an increase in the levy on high-octane fuel used in luxury vehicles by Rs200 per litre, effective immediately. The move, announced on Sunday, March 22, 2026, aims to generate approximately Rs9 billion per month in government savings, which will be allocated to public relief measures.
Levy Increase Details
The levy on high-octane blending component (HOBC) has been raised from Rs100 per litre to Rs300 per litre. This brings the total price of HOBC to Rs535 per litre . The Prime Minister’s Office (PMO) clarified that this increase will specifically target owners of the most expensive vehicles and will not impact fuel prices for ordinary vehicles, public transport, or airline fares .
Rationale Behind the Decision
According to the PMO, the decision is intended to reduce the burden on the economy and ensure that the wealthiest segment of the population contributes more to government revenue . Prime Minister Sharif took notice of the relatively low levy on high-octane fuel and directed the relevant ministry to develop an action plan for its revision .
Broader Economic Context
This decision follows the implementation of austerity measures earlier this month, including a 50% reduction in fuel allowances for official vehicles and a four-day perform week, in response to a fuel crisis triggered by regional geopolitical tensions . The government had also appealed to the public to adopt fuel conservation measures . Despite recommendations for further increases in general petroleum product prices, Prime Minister Sharif rejected those proposals, opting instead to focus on targeting luxury consumption .
Impact and Savings
The government anticipates monthly savings of Rs9 billion from the increased levy, which will be directed towards providing relief to the public . The PMO emphasized that the measure is designed to ensure that the burden of economic adjustments is borne by those most capable of absorbing it.