Petroleum Fund Pakistan creates price stabilisation account to reduce fuel price shocks

The federal government has established a new account for a petroleum price stabilisation fund to help manage future fuel price fluctuations and protect consumers.

The federal government has notified a new head of account to establish a Petroleum Price Stabilisation Fund, creating a financial mechanism to help reduce the impact of sudden fuel price increases.

The Ministry of Finance issued the notification on Monday, following the federal cabinet’s approval of the proposal on June 5.

New account created for price stability

According to the notification, all proceeds collected for the Petroleum Price Stabilisation Fund will be credited to the Public Account of the Federation under the major head “Special Deposit Fund.”

Meanwhile, the Finance Ministry said the Finance Division, the Petroleum Division and the Oil and Gas Regulatory Authority (Ogra) will jointly finalise the fund’s operating procedures. They will also obtain the required legal and financial approvals separately.

Fund aims to cushion future price shocks

The government proposed the fund after global oil prices surged during the recent US-Israel conflict with Iran.

Officials said Pakistan previously secured several oil cargoes through diplomatic arrangements at lower-than-market prices. However, authorities managed those purchases through administrative decisions instead of a formal legal framework.

As a result, the government decided to establish a permanent mechanism to capture similar savings in the future.

No deposits yet, but future funding planned

Officials said the fund does not currently hold any money.

However, they expect to transfer future savings, budgetary resources and funds generated through austerity measures into the account. The government plans to use these resources to smooth weekly petroleum price adjustments and reduce sudden price increases for consumers.

Furthermore, officials said the government may explore additional funding sources during the new fiscal year, although IMF programme restrictions limit financial flexibility.

Savings from discounted oil imports

The new fund will also allow the government to retain savings from discounted oil imports.

Officials said Pakistan could secure lower-priced petroleum from non-traditional suppliers, including the United States, Russia and Iran, or benefit from specialised storage arrangements.

Instead of allowing those financial gains to remain with oil-importing companies and refineries, the government intends to direct all or part of the savings into the stabilisation fund to support consumers.