Business Recorder
ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has called for urgent government intervention for suspension of petroleum levy and carbon levy on furnace oil (FO), warning that a worsening energy crisis is threatening Pakistan’s industrial competitiveness and overall economic stability. In a letter addressed to Prime Minister Shehbaz Sharif, the country’s apex business body said the power sector is under severe strain following disruptions in regional LNG supply chains. It cited Power Division briefings indicating that closure of the Strait of Hormuz and force majeure conditions declared by Qatar Energy—reportedly after damage to Ras Laffan facilities—have rendered Pakistan’s 6,000 MW RLNG-based generation fleet largely inoperative. FPCCI noted that to compensate for the shortfall, furnace oil (FO)-based power plants are being operated at near-maximum capacity under National Grid dispatch instructions. It cautioned that this shift is significantly increasing generation costs due to the higher price of furnace oil. READ MORE: APTMA urges govt to rationalize captive power levy The letter highlighted that under the Finance Act 2025—introduced as part of IMF structural benchmarks—a Petroleum Levy of Rs 77 per litre (Rs 82,077 per metric ton) and a Carbon Levy of Rs 2.5 per litre (Rs 2,665 per metric ton) were imposed on furnace oil, bringing total government levies to approximately Rs 84,742 per metric ton. FPCCI further noted that with global furnace oil prices reportedly doubling to around Rs 400,000 per metric ton, the combined effect of fuel costs and levies is adding an estimated Rs 2.50 to Rs 3.00 per kWh to electricity generation costs, pushing FO-based electricity prices to around Rs 55–65 per unit. It warned that under regulatory framework, these costs are expected to be passed on to consumers through Fuel Cost Adjustment (FCA), increasing pressure on both industry and households already facing high tariffs. To address the situation, FPCCI proposed two urgent policy options: Option 1: Temporary suspension of levies: suspension of Petroleum Levy and Carbon Levy on furnace oil from April 2026 until RLNG supply stabilises, suggesting an emergency SRO under relevant petroleum levy laws, with IMF engagement on account of force majeure conditions. Option 2: Direct FCA offset mechanism: Levy proceeds collected from furnace oil used in the power sector be redirected by the Ministry of Finance to CPPA-G as a targeted subsidy, thereby reducing monthly FCA charges for consumers. The business body cited two recent government actions as precedent for its proposal: (i) April 2025 electricity relief package: Rs 58.6 billion in petroleum levy collections were redirected to reduce electricity tariffs by Rs 1.71/kWh for all consumers, approved by the federal cabinet with Nepra concurrence and no objection from the IMF; and (ii) August 2025 captive power gas levy adjustment: ECC approved use of captive power plant gas levy revenues to reduce electricity tariffs by Re 1/kWh, a move also welcomed by the IMF. FPCCI argued that the current situation is more urgent as the furnace oil levy was introduced during an ongoing energy crisis, amplifying already elevated costs. The country’s prime chamber urged the government to adopt a Cabinet and Nepra-approved mechanism similar to previous relief measures, allowing levy proceeds to directly offset FCA charges for April–June 2026 or until RLNG supplies normalise. FPCCI emphasised that the proposal is consistent with IMF programme parameters and expressed readiness to provide technical and commercial data to support implementation. Copyright Business Recorder, 2026
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