The government, late on Thursday night, announced a hefty increase to the prices of petrol and high-speed diesel, maintaining the country can no longer afford a blanket subsidy amidst the ongoing Iran conflict and will shift to targeted subsidies for the agricultural sector and motorcycle riders.
In a nationally televised statement, Petroleum Minister Ali Pervaiz Malik and Finance Minister Muhammad Aurangzeb said the decision to hike prices of petroleum products followed consultations with provincial governments and the national leadership, including Prime Minister Shehbaz Sharif.
Malik asserted the Middle East conflict has triggered instability globally, adding Pakistan is likewise facing increasingly serious economic conditions. He claimed even developed countries are experiencing severe energy supply challenges, while neighboring countries are witnessing long queues for fuel.
“Today, the Pakistani nation needs one of the strongest displays of unity in its history,” he said, describing the price hike as “important and difficult” but necessary to prevent further deterioration. He claimed the government had made sustained efforts over the past two years to stabilize the economy, but acknowledged the latest decisions could reverse those gains. The federal government has already taken austerity measures to limit the burden on the public, he asserted.
Malik then announced the new consumer price for petrol would be Rs. 458.41/liter, an increase of Rs. 138/liter, while diesel prices rose by Rs. 184/liter to Rs. 520.35/liter, effective immediately. He reiterated the prices had to be raised due to existing agreements and commitments, despite efforts to shield the public from global price shocks. Officials said the price hike for petrol was a form of cross-subsidy, with the government reducing the petroleum development levy (PDL) on diesel to zero while maintaining a levy of Rs. 160/liter on petrol.
Meanwhile, the finance minister claimed the government had been reviewing the situation continuously over the past four weeks and decided to move away from blanket subsidies toward targeted relief. As part of this, he said motorcyclists would receive a subsidy of Rs. 100/liter for up to 20 liters of petrol per month for the next three months.
Similarly, truck operators would receive a monthly diesel subsidy of Rs. 70,000, while public service buses would receive a monthly subsidy of Rs. 100,000. The government will also subsidize railway fares to help control ticket prices, said Aurangzeb.
The minister then urged citizens to conserve electricity, saying national consensus would be needed to manage the crisis.
According to sources, the government is considering several additional measures to curb fuel consumption, including enforcing market closures by 8 p.m. They said the plan had yet to be finalized, adding consultations are underway with provincial governments.