The government of Pakistan has set up a dedicated Petroleum Prices Stabilisation Fund with the aim of protecting consumers from energy shocks emerging from any future tension in the region. This move follows a Federal Cabinet decision on June 5, 2026, and the Finance Division has formally decided to establish a fund account named the Petroleum Prices Stabilisation Fund, as stated in a letter from the Finance Division.
Implementation and Account Details
The Finance Division sent letters to the Auditor General of Pakistan, the Controller General of Accounts, the Accountant General of Pakistan Revenue, and the Accountant Generals of Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan. According to the Finance Division, all money received for the fund will be credited to the Public Account of the Federation. It will be recorded under a new head of account. The major head is G12 for Special Deposit Fund, and the minor head is G123 for Economic Fund, while the new detailed object is G12314 for the Petroleum Prices Stabilization Fund, the letter explained.
Operating Rules and Coordination
The operating rules for the fund will be developed jointly by the Finance Division, the Petroleum Division, and the Oil and Gas Regulatory Authority (OGRA), the letter said. This will be done while keeping in view the legal and financial requirements. Separate approvals will be sought once the modalities are finalized, it added.
Background: Previous Crisis and Austerity Measures
Notably, to protect consumers from the impact of abnormal price hikes caused by the Strait of Hormuz closure following the US-Israel attack on Iran, the government of Pakistan took various austerity measures. On March 6, Pakistan announced a historic increase of Rs55 per litre in petrol and diesel prices. However, for the following week of March 14 to March 20, the government decided to absorb the burden of rising global oil prices and did not increase the prices of petrol and high-speed diesel (HSD) for that week.
The federal government had established a Prime Minister's Austerity Fund, and a sum of Rs27.1 billion had been initially transferred to it. It was decided that the Prime Minister's Austerity Fund would be used to pay Price Differential Claims (PDC) to maintain the prices of petrol and HSD for three weeks. Through an official notification, the government introduced austerity and fuel-saving measures across government institutions, including temporary salary cuts for senior officials. To fund the fuel subsidy, the government also imposed a cut of Rs173 billion on the federal Public Sector Development Programme (PSDP).
Permanent Fund for Future Crises
Now, the government has established a permanent Petroleum Prices Stabilization Fund to efficiently tackle any future crises. This fund is intended to provide a structural mechanism to shield consumers from volatile international oil prices and regional tensions, such as those affecting the Strait of Hormuz. The opposition alliance has claimed that police stopped leaders from travelling to Azad Jammu and Kashmir, though this is not directly related to the fund.
