Islamabad witnessed a major policy update as the federal government declared a substantial increase in the price of light diesel, following a recent surge in kerosene oil rates. The latest official notification revealed that the cost of light diesel has been raised by Rs67.51 per litre, pushing the new retail price to Rs302.52 per litre. This adjustment comes on the heels of a similar sharp hike in kerosene oil prices, which were increased by Rs39.20 per litre, setting the new price at Rs358.01 per litre.
These price escalations are expected to have far-reaching consequences, particularly affecting transportation expenses and household budgets across the country. Rural communities, where light diesel and kerosene remain essential for daily activities and agricultural operations, are likely to feel the impact most acutely. The government’s decision to raise these prices reflects ongoing efforts to manage fiscal pressures while balancing the needs of consumers and the energy sector.
In contrast to the increases in diesel and kerosene, the government has opted to keep petrol prices stable despite rising international oil rates. The Ministry of Energy has committed to absorbing the cost difference by providing a subsidy amounting to Rs23 billion to oil marketing companies (OMCs). This move aims to shield consumers from immediate petrol price shocks, ensuring that the retail price of petrol remains unchanged for the time being.
The official notification further detailed that the petroleum levy on petrol will continue at Rs105.37 per litre, while the levy on diesel remains fixed at Rs55.24 per litre. To facilitate this subsidy, the government will cover Rs49.63 per litre on petrol and Rs75.05 per litre on diesel for the period spanning March 14 to March 20. The Oil and Gas Regulatory Authority (OGRA) has been tasked with overseeing the disbursement process, including the verification and auditing of bills submitted by the oil marketing companies to ensure transparency and accountability.
Meanwhile, the cabinet has given its approval for the creation of the Prime Minister’s Austerity Fund, a new initiative aimed at consolidating financial resources for economic stabilization. The Economic Coordination Committee (ECC) has authorized the transfer of Rs27.1 billion into this fund, with Rs23 billion earmarked specifically for OGRA to cover the fuel subsidy payments. This development underscores the government’s commitment to managing the country’s economic challenges through targeted fiscal measures.
Overall, these policy adjustments highlight the delicate balancing act the government faces in managing energy prices amid fluctuating global markets and domestic economic constraints. While the subsidy on petrol offers temporary relief to consumers, the increased costs of light diesel and kerosene signal a shift towards cost recovery in the fuel sector. The coming weeks will reveal how these changes affect inflationary pressures and the broader economy, especially in sectors heavily reliant on these fuels.
