Islamabad – The Pakistani government has moved to stabilize domestic fuel prices by banning the export of all petroleum products and considering a halt to planned price increases, despite rising global market costs. The government intends to utilize a Rs389 billion ‘emergency fund’ to mitigate the impact of potential price shocks on consumers.
Price Increases Loom, But May Be Averted
Recent estimates suggest potential increases of Rs56 per litre for high-speed diesel (HSD) and Rs41 per litre for petrol. Current retail prices are approximately Rs322 and Rs337 per litre for petrol and HSD, respectively. Kerosene and light diesel oil could similarly see price hikes of Rs7 and Rs53 per litre, respectively.
A petroleum price review is scheduled for March 15, though officials indicated a possible review as early as March 13. Prime Minister Shehbaz Sharif, in consultation with military leadership including Field Marshal Asim Munir, has reportedly decided to prevent further price increases “at least in the near future,” regardless of Middle Eastern market fluctuations.
Internal Divisions and Economic Concerns
Sources indicate disagreement within the cabinet regarding the prime minister’s announcement, with technocrats involved with the International Monetary Fund (IMF) expressing concerns about disrupting existing pricing mechanisms. The prime minister stated that no emergency is greater than potential fuel supply disruptions.
Minister of State for Finance and Railways Bilal Azhar Kiyani stated that the government will strive to avoid further burdening citizens, acknowledging a rising trend in international prices. The March 7 price increase of Rs55 per litre was defended by ministers as necessary to prevent supply disruptions similar to those experienced in Bangladesh and India.
The government has also taken steps to secure fuel supplies, including barring oil refineries from exporting furnace oil and naphtha to bolster power generation, following the suspension of liquefied natural gas (LNG) imports from Qatar. Gas supply to fertilizer plants will be curtailed, and rationing may be reinstated after Eidul Fitr to manage electricity demand and conserve foreign exchange reserves.
Current petrol and diesel inventories are estimated to last 22-23 days, though diesel imports may face logistical hurdles due to longer shipping times from alternative sources. Saudi Arabia is reportedly providing support to maximize local refinery production of HSD.
Frequently Asked Questions
What is the size of the emergency fund being used to stabilize fuel prices?
The government plans to draw on a Rs389 billion ‘emergency fund’ to absorb future price shocks.
When is the next petroleum price review scheduled?
The next price review is scheduled for March 15, but ministers indicate it could be reviewed on March 13.
What steps is the government taking to ensure fuel supply?
The government has banned the export of petroleum products, barred refineries from exporting furnace oil and naphtha, and is seeking support from Saudi Arabia for crude oil supplies.
As Pakistan navigates these complex economic challenges, what long-term strategies might ensure both affordable energy access and sustainable fiscal management?
