Government considers freezing petroleum prices despite global market surge

ISLAMABAD: The federal government has imposed a ban on the export of all petroleum products and is weighing the option of not increasing domestic petroleum prices in the immediate future, even as international oil prices continue to rise.

According to official sources, the government intends to utilize a Rs389 billion emergency fund to cushion the impact of potential price shocks, rather than passing the full burden onto consumers. This move follows recent estimates, based on the current tax structure and pricing formula, which indicate that the price of high-speed diesel (HSD) could increase by Rs56 per litre and petrol by Rs41 per litre. At present, petrol and HSD are being retailed at over Rs322 and Rs337 per litre, respectively.

Further estimates suggest that the prices of kerosene and light diesel oil could rise by Rs7 and Rs53 per litre, respectively. The next scheduled review of petroleum prices is set for March 15 (Sunday), although government ministers have indicated that the review could take place earlier, on March 13 (Friday).

Highly placed sources informed Dawn that Prime Minister Shehbaz Sharif recently addressed a consultative session attended by federal and provincial officials, where these measures were discussed in light of the ongoing volatility in the global oil market.

The decision to ban petroleum exports and consider freezing prices is aimed at protecting domestic consumers from the immediate effects of international price fluctuations. The government’s approach involves using the dedicated emergency fund to absorb the cost increases, at least in the short term.

Officials have not provided further details on how long the price freeze might last or the specific mechanisms for deploying the emergency fund. However, the government’s current stance reflects a commitment to shielding the public from abrupt fuel price hikes, despite the upward trend in global petroleum markets.