Pakistan creates fund to stabilize petroleum prices

Pakistan's government has officially established a price stabilization fund for petroleum products, a move designed to cushion consumers from volatile global oil prices. The decision, stemming from a federal cabinet meeting on June 5, was formally notified by the Ministry of Finance.

All revenue generated for the Petroleum Prices Stabilization Fund will be deposited into the Public Account of the Federation under a 'Special Deposit Fund' head. The finance division, petroleum division, and the Oil and Gas Regulatory Authority (Ogra) will collaborate to finalize the fund's operating procedures and modalities, adhering to legal and financial requirements.

The fund's creation addresses the need for a formal mechanism to manage price fluctuations, particularly in light of recent significant price hikes attributed to the US-Israel war on Iran. While the government has previously secured oil cargos directly, yielding savings, these actions were ad hoc. The new fund aims to formalize the channeling of savings from potential price advantages, sourced from unconventional imports or specialized storage, directly into price stabilization, preventing these benefits from solely accruing to oil-importing companies and refineries.