Pakistan’s latest petrol and diesel price hike, announced late last night, is a massive blow to a public already stretched thin by stagnant incomes and years of sustained inflation.
That this increase positions Pakistan among countries with the highest petroleum prices in the region—petrol at Rs. 458.41/liter and diesel at Rs. 520.35/liter—reflects not just global inevitability, but flawed domestic policy choices, most notably fuel taxation. In the latest announcement, the government has reduced the petroleum development levy (PDL) on diesel to zero, while imposing Rs. 160/liter on petrol. The cross-subsidization, per Petroleum Minister Ali Pervaiz Malik, aims to impose “minimal” increases to diesel prices in a bid to curtail inflation, while seemingly punishing anyone who utilizes petrol.
This is, unfortunately, nothing new.
The incumbent government has increasingly relied on the PDL, a surcharge initially meant for the upgradation, modernization, and development of oil refineries, as a convenient instrument to shore up revenues. Instead of taking the “difficult” decision to expand the tax net by bringing in wholesale traders, large landholders or the informal economy, the state has preferred to take the “necessary but difficult” step to derail household budgets, disproportionately burdening the middle and lower classes.
Reports suggest that, rather than seeking temporary relief or flexibility from the International Monetary Fund (IMF) amid global volatility, authorities maintained that external shocks would have minimal impact on Pakistan’s economy. This assessment now appears overly optimistic, at best, and misleading at worst. Reducing the PDL, even marginally, could have provided some respite. Instead, the decision to maintain or increase it signals a rigid adherence to revenue targets, regardless of social cost. This approach reflects a broader pattern of extractive governance, where the state prioritizes immediate fiscal inflows over long-term economic stability and public welfare.
Let’s be clear: the “difficulty” referred to by the petroleum and finance ministers last night is solely for ordinary citizens who are already experiencing higher transport costs, increased food prices, and a cascading rise in the cost of living. The impact on the country’s elite within government and beyond is far less tangible. Generous fuel allowances, official vehicles, and a system of perks and privileges ensure that those making these decisions remain insulated from their consequences.
Compounding the issue is the government’s notably lax approach to managing fuel consumption. Since the Iran conflict began, authorities have repeatedly blamed the public for “increasing” fuel consumption even as they kept reassuring citizens the situation was under control. Apart from swiftly-ignored notifications—minus the extractive imposition of fines on motorways after a sudden reduction in maximum speeds—there has been little effort to enforce meaningful conservation measures. The contradictory messaging has downplayed risks while shifting blame, deepening public skepticism.
Equally concerning is the absence of any credible mechanism for the targeted relief announced by the ministers. No timelines, no eligibility criteria, no distribution channels. This gap between rhetoric and action suggests a troubling pattern: announcing relief without the institutional readiness to implement it. In effect, the government wants to project responsiveness, not actually deliver it.
The manner of the announcement also speaks volumes. Late-night notifications have become a hallmark of unpopular decisions, minimizing immediate backlash but reinforcing a perception of detachment. Such timing suggests a government more concerned with managing optics than engaging transparently with its citizens.
Ultimately, this latest price hike furthers a perception of the incumbent government consistently squeezing the same pool of taxpayers, while leaving powerful sectors untouched. There is no chance of any economic “reform” succeeding if it is seen as unfair or one-sided.
To navigate its current challenges, Pakistan must move beyond short-term fixes and embrace structural change. That means expanding the tax base, reducing reliance on regressive levies, and ensuring that sacrifice, when necessary, is shared equitably. Until then, each new price hike will serve as a reminder that, in the eyes of a majority of citizens, the system exists solely to punish rather than benefit them.