Islamabad – The Pakistani government has moved to ban all exports of petroleum products and is weighing options to freeze domestic prices, despite rising costs in the global market, officials confirmed Thursday. The decision comes as the nation braces for potential fuel supply disruptions and seeks to mitigate economic hardship for its citizens.
The government is preparing to utilize a Rs389 billion emergency fund to absorb anticipated price increases, according to sources within the administration. Current estimates suggest that high-speed diesel (HSD) prices could rise by Rs56 per litre, while petrol could increase by Rs41 per litre. Kerosene and light diesel oil are also projected to see price hikes of Rs7 and Rs53 per litre, respectively. Petrol and HSD are currently priced at approximately Rs322 and Rs337 per litre at retail.
Prime Minister Shehbaz Sharif, in a recent consultative session with federal and provincial representatives, reportedly stated that, in coordination with the military leadership, no further price increases would be implemented “in the near future,” regardless of fluctuations in Middle Eastern markets. Field Marshal Asim Munir also attended the session. The Prime Minister emphasized that no other national emergency could compare to the potential consequences of fuel supply disruptions, according to sources who spoke with Dawn.
However, the proposed freeze has met with internal resistance. Cabinet members, particularly those engaged with the International Monetary Fund (IMF), have expressed concerns about disrupting existing pricing buffers.
Petroleum Minister Ali Pervez Malik, speaking before the Senate Standing Committee on Finance, indicated that attempts were underway to manage petroleum prices in line with the Prime Minister’s directives, with a final decision expected after a review of global prices on Friday. Minister of State for Finance and Railways Bilal Azhar Kiyani echoed this sentiment, stating that the government would strive to avoid further burdening the public, acknowledging the upward trend in international prices. Both ministers defended the Rs55 per litre price increase implemented on March 7, citing the necessitate to prevent supply disruptions similar to those experienced in Bangladesh and India, where fuel stations were reportedly attacked by consumers.
Finance Minister Muhammad Aurangzeb confirmed that international oil prices continue to climb. While benchmark Brent crude is often cited in public discourse, Pakistan’s oil imports – over 95% of which originate in the Middle East – are more closely tied to Dubai-based pricing, currently standing at $120 per barrel for petrol and $168 per barrel for diesel, compared to $105 for Brent. Fluctuations in Brent prices are often linked to statements from the US regarding the conflict in Iran, according to reports.
In a separate move to bolster domestic fuel supplies, the government has prohibited oil refineries from exporting furnace oil and naphtha, aiming to secure resources for power generation following the suspension of liquefied natural gas (LNG) imports from Qatar. Qatar declared force majeure last week after its processing facilities were reportedly targeted by Iran. Gas supplies to fertilizer plants will be curtailed, and gas rationing is expected to be reinstated after Eidul Fitr to minimize electricity load shedding and conserve foreign exchange reserves.
Current petrol and diesel stocks are sufficient for 22-23 days, but diesel supplies are considered more vulnerable due to the longer import transportation times from alternative sources. Saudi Arabia is reportedly providing support and crude supplies to maximize the utilization of local refineries for HSD production. However, very large crude carriers (VLCCs) rates have increased significantly, limiting direct deliveries to Pakistani ports; these vessels may need to anchor in Oman for transfer to smaller feeder ships.
Informal supplies of liquefied petroleum gas (LPG) from Iran have reportedly doubled since the outbreak of the Iran conflict, potentially driven by cash needs across the border and challenges in formal supply channels.
The next price review is scheduled for March 15, but ministers have indicated a possible review as early as Friday, March 13.
