Pakistanis may soon face a sharp spike in fuel costs as the government signals a major policy shift.
Authorities have assured the IMF they will align petroleum prices with global rates, potentially triggering a massive increase from next week.
The federal government has assured the International Monetary Fund (IMF) that petroleum product prices will be increased in line with global market trends. Sources indicate that from next week, fuel prices could rise by more than Rs100 per litre, marking one of the steepest hikes in recent times.
Just last week, the government held back a significant price increase. The prime minister had rejected a proposal to raise petrol prices by Rs95 per litre and also blocked a Rs203 per litre increase in diesel prices, providing temporary relief to consumers.
To maintain prices despite rising global oil costs, the government diverted funds from the Public Sector Development Programme (PSDP). Out of Rs100 billion withdrawn from the development budget, around Rs56 billion was given as subsidy to oil companies last week.
Officials say that if more PSDP funds are used, the expected price hike could be reduced, though this would further strain development spending.
Final decision to be taken with provinces
Sources in the Petroleum Ministry confirm that the federal government will make the final decision on price adjustments in consultation with the provinces. This suggests that discussions are still ongoing, but the direction toward higher prices appears inevitable.
Global oil prices remain high
The pressure to increase domestic prices comes as global oil markets remain elevated.
Last week, petroleum prices in the international market hovered between $106 and $108 per barrel, and they continue to stay within the same range even now.
Fuel demand rises despite austerity
Interestingly, fuel consumption in Pakistan has surged despite the government’s austerity campaign. Sales of petroleum products increased by 13% in March, according to industry sources.
Oil marketing companies (OMCs) recorded strong growth in sales:
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Total sales reached 1.44 million tons in March, showing a 19% annual increase
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Over the first nine months of the fiscal year, total sales stood at 12.40 million tons
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Overall OMC sales grew by 5% year-on-year
Petrol, diesel demand surges
Breakdown of fuel sales highlights strong demand across categories:
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Petrol: 0.67 million tons, up 16% annually
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Diesel: 0.62 million tons, a record 21% increase
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Furnace oil: Massive 98% month-on-month rise
Company-wise figures show:
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Pakistan State Oil (PSO): 0.63 million tons
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Attock Petroleum: 0.11 million tons
With global prices staying high and subsidies becoming unsustainable, consumers should brace for a significant increase in fuel prices.
Unless the government opts for further budgetary support, the anticipated hike of over Rs100 per litre could soon become a reality.
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