Govt considers levy on gasoline-powered cars to promote electric vehicles

Government also decided to establish an “EV Fund” to support the growth of electric transportation


Irshad Ansari May 31, 2025

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ISLAMABAD:

The government is considering a five-year levy on all vehicles powered by petrol and diesel to promote electric vehicle (EV) adoption in the country. It has also decided to establish an “EV Fund” to support the growth of electric transportation.

The EV Fund will be set up to facilitate electric vehicle adoption, and a levy is proposed on all petrol and diesel vehicles—both imported and locally manufactured—for the next five years. If approved and implemented, this levy could generate annual revenue of Rs25–30 billion, amounting to Rs125–150 billion over five years. The collected revenue would be used to finance the new five-year Electric Vehicle Policy for 2026–30.

Meanwhile, the International Monetary Fund (IMF) has raised concerns about the government’s proposal to provide idle electricity for Bitcoin mining and artificial intelligence operations, according to sources in the Finance Ministry.

The IMF has sought an explanation for not being consulted on the use of electricity for Bitcoin mining and AI, as well as on electricity tariffs. A virtual discussion is scheduled with the IMF delegation specifically regarding electricity supply for Bitcoin mining.

The IMF has also asked for clarification on the allocation of electricity for cryptocurrency operations, particularly since crypto remains unregulated in Pakistan.

The IMF has insisted that all decisions under the loan programme be made with prior consultation. Sources confirm that Pakistan’s economic team is facing tough questions during budget negotiations, and further hard discussions with the IMF regarding electricity supply initiatives are anticipated.

According to sources, many key economic targets in the budget proposals have already been finalised in consultation with the IMF, while discussions on other areas are ongoing and expected to conclude in the coming days. It has also been proposed to offer incentives for the local manufacturing of laptop and smartphone batteries and chargers.

Sources added that virtual consultations with the global lender are ongoing regarding budget proposals for the upcoming fiscal year, with an outcome expected soon. The draft budget will likely be finalised next week.

Both Pakistan and the IMF have agreed to continue virtual talks on all outstanding matters.

In the federal budget for fiscal year 2025-26, the government is likely to set a GDP target of 4.2%, an inflation target of 7.5%, an agricultural growth target of 4.5%, an industrial growth target of 4.4%, and a services sector growth target of 4%.

The Annual Plan Coordination Committee (APCC) will convene on June 2 to finalise the Public Sector Development Program (PSDP) and the annual development plans. Later that same week, a key meeting of the National Economic Council (NEC), chaired by the prime minister, will be held where approval will be sought for the PSDP, annual development plans, and the Medium-Term Budgetary Framework proposed by the APCC. If adjustments or increases in funding for development projects are required, the NEC will approve them.

The Economic Survey, detailing the performance of the current fiscal year, will be released on June 9. The federal budget will be presented in parliament the following day, June 10, after its approval by the federal cabinet in a special session.

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