Pakistan’s federal government has asked oil refineries to absorb a Rs15 billion monthly cost, keeping petrol 15 rupees per litre cheaper than the international market amid the US‑Israeli‑Iran conflict.
Key Policy Moves
- Refineries shoulder Rs15 billion/month to offset global price spikes.
- Petrol sold 15 rupees per litre below world prices.
- Prime Minister Shehbaz Sharif directed the intervention on Friday.
- SMS‑based subsidy: motorcycles get Rs500 weekly, 800cc cars receive 10 litres every 10 days at Rs100/litre discount.
- 15 million users registered; Rs27 bn allocated to the scheme.
- No fuel shortage reported; November supply fully covered.
- High‑speed diesel price fell from a peak of Rs520.35 to current levels.
Context Behind the Move
The policy follows the escalation of the US‑Israeli war on Iran, which has pushed global oil prices higher. Pakistan’s economy has weathered the shock better than many peers, with macro‑economic indicators remaining relatively stable. Historically, refinery premiums were $5 per barrel; a $20 cap has now been imposed. The government’s fuel subsidy scheme, launched on September 13, is part of a broader austerity package that includes market closures after 9 pm and a 50% cut in official vehicle fuel allocations.
What Comes Next
Officials say the temporary absorption of price hikes will be lifted once the Middle East crisis eases, with a return to deregulation and market‑driven pricing. The government will monitor winter supply needs and may adjust allocations accordingly. The subsidy scheme’s success could set a precedent for targeted relief in future commodity shocks.