The federal government has notified a new head of account to establish the Petroleum Prices Stabilisation Fund, aimed at cushioning consumers against sudden fuel price shocks. The notification was issued on Monday by the Ministry of Finance, implementing a decision approved by the federal cabinet on June 5.
According to the notification, all proceeds received under the Petroleum Prices Stabilisation Fund will be credited to the Public Account of the Federation under the major head “Special Deposit Fund.” The operating procedures and modalities governing the Fund will be jointly finalised by the finance division, the petroleum division and the Oil and Gas Regulatory Authority (Ogra), in line with legal and financial requirements. Separate approvals will be sought for this purpose.
The Fund was conceived after petroleum prices saw historic increases in recent months amid the US-Israel war on Iran. The government had previously secured a few oil cargos directly through special diplomatic efforts, achieving notable savings compared to standard industry rates. However, such arrangements were carried out on an ad hoc basis using administrative powers, without a formal legal mechanism in place.
Officials familiar with the matter said the Fund currently holds no deposits, but was established to enable the government to capitalise on similar opportunities in the future. Funds accumulated over recent months, or generated through future austerity measures, could be channelled into the account. These resources would then be used to moderate weekly adjustments in petroleum prices and reduce the impact on consumers.
Sources said the government may explore new funding avenues in the next fiscal year, given restrictions on fiscal manoeuvring under the IMF programme. A limited share of special provincial grants to the federal government could also be allocated for petroleum, oil and lubricants (POL) price stability.
Officials noted that oil imports from non-traditional sources such as the United States, Russia and Iran, as well as specialised storage arrangements, can offer discounts compared to conventional Middle Eastern supplies. Under the new framework, such savings would be partly or fully directed into the stabilisation fund, rather than benefiting oil-importing companies and refineries alone.
